NOTE:
Offers of Settlement (OS) and Letters of Acceptance, Waiver, and Consent (AWC)
are entered into by Respondents without admitting or denying the
allegations, but consent is given to the described sanctions and to the
entry of findings.

Nagler borrowed $3,000
from a public customer contrary to his member firm ís
written procedures prohibiting its registered representatives
from borrowing or lending money from or to a client under any
circumstances. Nagler failed to request or obtain his firm ís
permission to borrow money from a public customer. He misled
another member firm during the hiring process when he failed
to advise the firm that he had been permitted to resign
from a previous firm for violating its policy prohibiting
borrowing funds from customers.

David Anthony Nagler: Fined $10,000; Suspended 20 business days in all
capacities

Flitt borrowed $2,660
from a public customer without his member firm ís
approval and contrary to his firm ís written procedures prohibiting
representatives from borrowing money from customers; and then
failed to respond to FINRA requests for information.

Daniel Stephan Flitt: Barred

Michael R. Colletti (Principal)
AWC/#2005003383701/October 2007

Colletti submitted timesheets
for certain individuals that were false when he executed them, in
that he knew the individuals did not work the hours that the timesheets
presented.

Michael R. Colletti: Barred

Bill Singer's
Comment: Can you imagine this? False timesheets! Okay, bar the
guy. Now, let's see how FINRA acts when it soon realizes the false
pricing of all that subprime crap sitting in everyone's funds--and which
have hammered the markets. I wonder how many of the big boys will be
barred for such a violation?

Therese C. Castro (Principal)
AWC/2005002680301/October 2007

Castro asked an unregistered
employee of her member firm or its affiliate to place Castroís
initials on numerous pieces of branch correspondence as evidence
that she had reviewed the correspondence, although she had not done so.
Castro falsely certified in monthly reports submitted to her member
firm that a supervisor had reviewed daily trade blotters when many
had not been reviewed.

Bullock held several seminars
to promote the sale of equity indexed annuities and fixed annuities
to retirees, promoted the seminars through the use of invitations
and used a presentation that contained unwarranted, misleading,
unsubstantiated and promissory statements, including false
assurances of riskless investing and guarantees that the retirees would
never run out of money.

Bruce David Bullock: Fined $10,000; Suspended 20 business days.

Ramona Marie Bianchi
AWC/#2007008767001/October 2007

Bianchi obtained possession of an automatic teller machine (ATM)
card for a public customerís account and, without the customerís
knowledge or authorization, used the ATM card to make unauthorized cash
withdrawals from the customerís bank account, and unauthorized
purchases totaling $68,000 for her own benefit.

Amsler engaged in private securities transactions for compensation;
failed to give his member firm written notice; and his member
firm did not authorized Amsler to engage in such activities. The
firm ís written procedures specifically prohibited representatives
from becoming involved with the sale of promissory notes.

Bill Singer's
Comment: I'm seeing a pick-up in private securities violations this year
and a recent rise in promissory note cases. Be aware that a
promissory note may be deemed a security. See the Freed
case above for a second PN matter this month.

Pali Capital, Inc.
AWC/#2005000717001/October 2007

The Firm permitted an associated person to engage in proprietary
equity trading on the firm ís behalf without being properly
registered. While serving as the placement agent for an issuer
conducting a private placement, the Firm instructed the escrow agent bank
for the private placement to release
funds to the issuer before the contingency amount set forth in the escrow
agreement had been received in the escrow account.

The Firm failed to maintain and
preserve copies of internal and external electronic e-mail
communications as Section 17(a) of the Securities Exchange Act of 1934 and
Rule 17a-4 require; and failed to implement and enforce an adequate
supervisory system governing the review of external communication.

Some of the Firm's registered representatives sent business-related
e-mail through external electronic servers without first obtaining
firm approval; and in some of those instances, the Firm:

failed to provide for
reasonable follow-up and review upon learning that the
registered representatives were using external e-mail accounts,

did not timely detect and
prevent such use; and

did not effectively enforce its procedures relating to external
e-mail accounts.

The findings also stated that the firm failed
to retain certain business-related e mails its registered
representatives sent and received using external accounts and, as a
result, it failed to maintain and preserve all of its electronic
communications as the Securities Exchange Act of 1934 and Rule 17a-4
requires.

Bill Singer's
Comment: One of the problems with these cases is that you truly can't
figure out how much of the fine is fair and how much is excessive.
If this member firm's RRs sent business emails through external servers
"without first obtaining firm approval," how the hell does FINRA
suppose that the member firm was supposed to know about this? I mean
this seriously. If the RRs are not following firm policy and
intentionally doing an end run, how is the firm supposed to know?
Now, clearly, there are some reasonable precautions that member firms can
take in this regard, but where are they even noted in this decision?
Don't bother checking, no such help is offered.

Now, to be
fair, the decision does note that "upon learning that the registered
representatives were using external e-mail accounts" the firm failed
to provide reasonable follow-up and review. If that's the case, then
some fine is likely appropriate. The problem is that we are left to
guess at the extent of the violation, we are left to guess at what the
firm could have done to detect the external server use, we are left to
guess at how much of the fine was attributed to failures upon notice of
the violation.

The Firm's order tickets for corporate bond transactions were
deficient, in that the order tickets failed to identify the terms and
conditions of the order; did not contain the time
of receipt and did not indicate whether the order was solicited or
unsolicited.

Acting through Weller, the Firm failed to terminate the ďminimum-maximumĒ
offering memorandum and return
investor funds after failing to raise the minimum offering amount
represented by the offering memorandum during the offering period, thereby
rendering the representations in the memorandum false. The offering
memorandum represented that investor funds would be deposited into a bank
escrow account until the minimum offering amount was raised, and that
investor funds would be promptly returned if the minimum offering amount
was not raised during the offering period. Also, acting through Weller,
the Firm failed to establish and maintain supervisory system reasonably
designed to achieve compliance with applicable securities, laws,
regulations and NASD rules regarding contingent securities offerings.

filed late Financial and Operations Combined Uniform Single (FOCUS)
Reports and failed to timely file its Schedule I Report on Revenue and
Expenses; and

failed to maintain a fidelity bond and failed to notify FINRA on the
termination of the fidelity
bond.

Olivier acted in a capacity at the firm that required
registration, while his registration status with FINRA was iinactive due
to his failure to complete the Regulatory Element of the Continuing
Education Requirements.

Acting through Wall, a member firm failed to adopt a supervisory
system and written procedures reasonably designed to ensure that
the firm obtained and retained the
required written consent for Web CRD searches. As a result of the
supervisory deficiencies, Wall failed to obtain and/or retain the required
written consent in connection with Web CRD searches for individuals who
were not seeking employment
with the firm . Wall affirmed to Web CRD that he had obtained and would
keep on file the required written consent in connection with the
pre-registration searches of the individuals.

Without his member firm 's approval, Tsamalas borrowed
$453,000 from public customers, contrary to his member firm 's
written procedures that prohibit representatives from borrowing money from
customers. Subsequently, Tzamalas failed to respond to NASD requests for
documents and information.

Peter Tzamalas: Barred

Jackie Gee-Kit To
AWC/#2005002832901/September 2007

To plagiarized the content of a
research report another member firm issued and internally
circulated the report, indicating that he was its author. The report was
published by To's member firm as a research report written by the firm 's
lead analyst and To.

Jackie Gee-Kit To: Fined $7,500; Suspended 60 days; Required to requalify
by exam as a Research Analyst Part II-Regulations Mode within 90 days of
reassociation with a member firm . If To fails to requalify as a
Research Analyst Part II-Regulations Mode within the 90 day period, he
will be suspended from acting in such capacity until the examination is
successfully completed.

Bill Singer's
Comment: Oh FINRA, FINRA, FINRA . . . you do have the ability to drive me
nuts. Let me see if I get this one. To plagiarized a research
report. Okay, not a nice thing to do. Now, would someone
please pull out the FINRA rulebook and show me where it's a regulatory
violation to plagiarize a research report? I'm not saying this was a
nice thing to do, and if the other report were copyrighted, well, it might
certainly be an infringement of the copyright. However, is every single
misconduct (including personal indiscretions and professional miscues) by a registered person
a regulatory violation? I
mean, geez, where does this nonsense end? Let's assume, for the
moment, that Mr. To read this other report and agreed with its analysis,
conclusions, and recommendation. If he then issued the plagiarized
report under his own signature, that subterfuge may well give rise to a
lawsuit by the true author for copyright infringement, but I don't see how the "integrity"
of the issued report is at issue -- my example was premised upon the fact
that Mr. To agreed with all aspects of the prior report.

Separately,
and more to the point, I invite you to look at many of the other cases I
have reported on this page for 2007 -- or even go back over the years of
my website's content. I want you to carefully consider the types of
matters that result in lesser sanctions than that imposed upon Mr.
To. For example, look down two cases to the Solash
matter. There FINRA imposed a $7,500 fine and only a 45-day
suspension on someone who effected unauthorized trades in an account
related to a deceased customer. Is it truly fair to suggest that
sending out a plagiarized report is a worse violation than unauthorized
trading? Ultimately, you want to make Mr. To requalify, go
ahead -- makes sense to me. You want to fine him a few thousand
dollars on top of that? Okay, not much quibble from me on that
too. However, at some point enough is enough -- did he really need
to be suspended for two months AND required to requalify?

Richard Adam Thayer
#2006005175401/September 2007

Thayer withdrew $2,000 from a
public customer's bank account for his own use and benefit. In an
attempt to conceal his wrongdoing, Thayer transferred $2,000 from another
customer's account to replace the funds taken from the first customer and
then transferred $2,000 from a third customer's account to restore the
funds taken from the second customer's account. Subsequently, Thayer
failed to respond to NASD requests for information.

Richard Adam Thayer: Barred

Bill Singer's
Comment: Scorecards! Get your scorecards!! Okay, so the broker comes
to bat and takes money from a customer's bank account. Strike One!
Then he borrows from Peter to pay Paul. Strike Two!! Then,
there's this third account . . . and . . . who's on first????

Bill Singer's
Comment: Sometimes the NASD/FINRA makes it too easy for me to take pot
shots. Here's a perfect example. Ms. Pollard submitted herself
to a full-fledged hearing before the Office of Hearing Officers.
Perhaps she could have settled the charges but decided she was "not
guilty" and sought her day in court. Rather than stand accused
of loading the issue, let me simply quote directly from the OHO decision
that was forthcoming after the National Adjudicatory Council agreed to
consider the Staff's appeal of Ms. Pollard's case:

Following the disciplinary hearing relating solely to Pollard,
the Hearing Panel issued an order on August 27, 2004, granting Pollardís
motion for summary disposition and dismissing the Complaint, based on
a finding that Pollard did not receive any compensation or benefit,
directly or indirectly, from filing the Form 211 applications. On
September 17, 2004, Enforcement appealed the Hearing Panelís
decision to the National Adjudicatory Council (ďNACĒ). On December
30, 2005, the NAC issued an Amended Decision Ordering Remand. In its
decision, the NAC (i) reversed the Hearing Panelís findings, (ii)
granted Enforcementís motion for summary disposition, holding that
Pollardís actions violated NASD Conduct Rules 2460 and 2110 because
but for her actions Equitrade would not have received compensation for
filing Form 211 applications in violation of Rule 2460, and (iii)
directed the Hearing Panel to hold a hearing to determine appropriate
sanctions for the violations. The NAC expressed no view on what
sanctions would be appropriate.

Following a
hearing -- let me repeat that: FOLLOWING A HEARING -- the Hearing Panel
granted Pollard's motion to dismiss. And after all of that, the NAC
entertains an appeal by Enforcement and reverses the Panel and finds
Pollard guilty. Honestly, what the hell is the point of
OHO?

Ralph Curtis Lewis
AWC/#2006004774901/September 2007

Lewis borrowed $18,367
from a public customer even though his member firm 's written procedures
prohibited registered persons from borrowing from customers, and Lewis
neither disclosed the loans to his firm nor obtained consent from the firm
to borrow from the customer.

Johnson converted $42,000 from
a church while serving as its treasurer.

Richard James Johnson: Barred

Bill Singer's
Comment: Which just proves that you really can't make this stuff up.

Erica L. Hintze
AWC/#2006007521401/September 2007

Hintze signed a branch
manager's name on account-related documents and signed his name using a
medallion guarantee stamp without his permission or authority.
Hintze signed a public customer's
name on name change forms without the customer's permission or
authority.

Hiller failed to disclose in
writing to her member firm the existence of outside brokerage accounts
in which she held a beneficial interest. She also failed to notify one of
the member firms at which she had an account that she was associated with
an NASD member firm . Hiller failed to respond to NASD requests to provide
sworn testimony.

Without a public customer's written authorization, Goldman affixed
the customer's signature to a 403(b) payroll deduction application for
purposes of increasing her retirement account contribution. Goldman did
not provide any notation evidencing his signature on the document and did
not notify his member firm that he was signing on the customer's
behalf.

David S. Goldman: Fined $5,000; Suspended 90 days in all capacities

Bill Singer's
Comment: This case is a particularly poor example of FINRA's lack of
clarity in explaining its sanctions. The SRO's report specifically
notes that the signature was affixed without a "written"
authorization -- which begs the question as to whether there was an
"oral" authorization (and one which, perhaps, even the customer
acknowledges). Are we to understand that the relatively modest fine
and suspension were imposed in consideration of Goldman acting with
"oral" but not "written" prior authorization, or did
he simply sign the signature without any prior customer
authorization? I would remind the regulator -- for the umpteenth
time -- that it has an obligation to educate the member and registered
community as to the basis for its charges and subsequent sanctions.
This case is a terrible example of not saying enough.

Gaskill borrowed $3,000 from a
public customer, contrary to his member firm 's written policies
and procedures prohibiting representatives from borrowing money from
customers; and he subsequently failed to respond to NASD requests to
appear for an on-the-record interview and to provide documents.

Tearle Guy Gaskill: Barred

Christopher Patrick Cataldo
AWC/#2006006843901/September 2007

Cataldo falsely represented to a public customer that he had
listened to a recorded conversation his member firm maintained of
an earlier conversation between the customer and another firm
representative indicating that the customer had been advised that he would
be charged a contingent deferred
sales charge if he liquidated his mutual fund before a certain date,
when no such recording existed.

Bill Singer's
Comment: Sounds like an old "Get Smart" episode --- Would you
believe that I have a tape on which I told you that there would be a CDSC
if you liquidated too early? No?? Would you believe I have a
tape on which I told you that I was on vacation and couldn't take your
call? No??? Would you believe . . .

Michael Forrest Brinlee (Principal)
OS/#2005001575201/September 2007

Brinlee misappropriated funds from public customer's estate by writing
a $9,045 check against the customer's bank account in order to make a tuition
payment for a family member's benefit.

Borsky initially provided and caused his firm to provide false
information to NASD although shortly thereof he corrected the false
information.

Mark Allen Borsky: Fined $5,000; Suspended 2 years in all capacities

Sidoti & Company, LLC
AWC/#20060037743-01/September

The Firm sent draft research
reports to approximately 200 subject companies prior to publication
that contained analyses, estimates, projections and conclusions; and one
of the research reports contained a price target and research rating.

Sidoti & Company, LLC : Censured; Fined $25,000

National Securities Corporation
AWC/#E8A2004064501/September 2007

The Firm ignored red flags indicating that a registered representative
under heightened supervision was circumventing this supervision by
engaging in a scheme with another registered representative who was his
brother-in-law.

While it maintained and
preserved communication sent through its Bloomberg system which was
the predominant means by which its representatives communicated with the
firm 's clients, the Firm failed
to preserve properly in a non-rewriteable and non-erasable format email
communications sent to and from its email addresses as well as personal
email addresses three firm representatives used. The Firm lacked
fully compliant systems and procedures for the preservation of all of its
electronic mail communications.

Mischler Financial Group, Inc. : Censured; Fined $10,000; Required to
review its procedures regarding the preservation of electronic mail
communications for compliance with applicable NASD rules, and federal
securities laws and regulations, and certify to NASD (and now, FINRA) in
writing that it has established systems and procedures reasonably designed
to achieve compliance with those rules, laws and regulations.

Bill Singer's
Comment: Thankfully FINRA is fairly consistent in applying sanctions to
the same or similar violations. Otherwise, we would have fines and
suspensions all over the place. I mean here in Mischler we have a
failure to properly preserve emails and the firm is fined $10,000.
And if you look one case down to Midas, you see that for a similar
violation the firm was also fined $10,000 --- oh, wait a minute, Midas was
supposed to be fined far more than $10,000 but out of the goodness of
FINRA's heart, Midas was fined only $14,000. Okay, so that's not a
big deal percentage wise over Mischler -- ummm, well, gee, that's 40%
more! Well, thankfully, but for that one oddity, all of these email
cases are closely sanctioned. Just look two cases down at Georgeson
where another member failed to properly preserve emails. And they
were fined . . . let's see . . . hmmm . . . $30,000. Well that's
close enough to Mischler at a 300% difference and close enough to Midas at
about a 200% percent difference. Wow, those Sanction Guidelines must
be really flexible on the upside.

The Firm failed to establish and maintain a system to supervise the
activities of each registered and associated person in a manner reasonably
designed to achieve compliance with applicable securities laws and
regulations, including email
retention and review of correspondence. The Firm failed to
establish, maintain and enforce adequate written supervisory procedures
regarding electronic mail retention.

Midas Securities, LLC: Censured; Fined $14,000 (Pursuant to the General
Principles Applicable to all Sanction Determinations contained in the
Sanction Guidelines, NASD imposed a lower
fine in this case after it considered, among other things, the firm 's
revenues and financial resources. See Notice to Members 06-55.);
Required to review its procedures regarding the preservation of electronic
mail communications for compliance with applicable NASD rules, and federal
securities laws and regulations, and certify to NASD (and now, FINRA) in
writing that it has established systems and procedures reasonably designed
to achieve compliance with those rules, laws and regulations.

Bill Singer's
Comment: Oh that someone at FINRA would routinely remind the powers that
be, that the Sanction Guidelines are --duh -- GUIDELINES and not mandatory
grids. Here a member firm was only fined $14,000 because its
revenues and financial resources were questionable. Not that $14,000
is spit, but who knows how many more dollars the eager Staff was hoping to
get for failing to retain emails. I mean, you know, that's got to be
at least a million dollar fine (okay, sorry for the sarcasm).

The Firm failed to maintain and preserve all of its
electronic communications as required by SEC Rule 17a-4. The Firm
electronically "backed-up" electronic communications at the end
of each day, but failed to
capture, maintain and preserve any electronic communication deleted from
user's deleted items folder during the day.

Georgeson Securities Corporation : Censured; Fined $30,000

Bill Singer's
Comment: Frankly, this one is sort of funny. The Firm apparently
saves its electronic communications on an intra-day basis.
Good! Then the firm does the next necessary step of electronically
backing up each days communications at the end of the day. Good
again! However, if someone merely deleted an item during the
intra-day period, the member's system did not retain such deletions.
Ooops. I mean, think about it, if all someone had to do was read an
objectionable email alleging all sorts of nastiness and then simply hit
delete, that wouldn't be much of an archiving system.

Dougherty & Company LLC
AWC/#20050001341-01/September 2007

The Firm failed to purchase municipal
securities for its own account from public customer or sell
municipal securities for its own account to a customer at an aggregate
price that was fair and reasonable, taking into consideration all
relevant factors, including

the best judgment of the firm as to the fair
market value of the securities at the time of the transaction,
and of any securities exchanged or traded in connection with the
transaction;

the expense involved
in effecting the transaction;

the fact that the firm was entitled to a profit;
and

the total dollar amount of
the transaction.

The Firm bought/sold corporate
bonds for its own account from /to another broker-dealer and failed
to sell/buy the security to/from firm customer at a price that was fair,
taking into consideration all relevant circumstances noted above.

The Fiirm failed to report the lower of yield to call or yield to
maturity for transactions in TRACE-eligible securities to TRACE
and the Firm 's supervisory system did not provide for supervision
reasonably designed to achieve compliance with applicable securities laws,
regulations and Municipal Securities Rulemaking Board (MSRB) rules
concerning municipal bond pricing, and NASD rules concerning corporate
bond pricing and TRACE reporting.

The Firm bought/sold securities for its own account from /to another
broker-dealer and failed to
sell/buy the securities to/from firm customers at prices that were fair
and reasonable, taking into consideration all relevant
circumstances, including market conditions with respect to the securities
at the time of the transactions, the expense involved, and that the firm
was entitled to a profit. The Firm failed to adequately enforce its
written supervisory procedures to ensure compliance with applicable
securities laws, regulations and NASD rules concerning fair
pricing and markups.

Dominick & Dominick, LLC: Censured; Fined $18,000

AIG Financial Advisors, Inc.
AWC/#2006003910901/September 2007

The Firm permitted an individual subject to a statutory
disqualification to be associated with the firm.

AIG Financial Advisors, Inc. : Censured; Fined $15,000

Ko Securities, Inc. and Terrance Yutaka Yoshikawa (Principal)
#CMS000142/September 2007 United States Court of Appeals denied
Petition for Review of a Securities and Exchange Commission Decision.

The Firm and Yoshikawa executed short
sales without making and annotating the affirmative determinations
required for each short sale. Acting through Yoshikawa, the Firm failed to
maintain a record of the terms and conditions, time of entry and execution
time for each customer order.

Acting through Testaverde, the Firm solicited one of its customers, who
was a controlling shareholder of a company, to sell the firm shares of a
common stock in amounts that exceeded
the limits that a controlling shareholder could sell in public
transactions. The Firm purchased these shares with the
intent to distribute them through its market making activities and then
resold them to the public.

Acting through Hunt, the Firm failed to establish, maintain and enforce
a supervisory system, including written procedures, reasonably designed to
ensure compliance with the requirements of Section
5 of the Securities Act of 1933, and failed to reasonably supervise
Testaverde's activities in connection with soliciting the customer to sell
large blocks of stock to the Firm.

Network 1 Financial Securities Inc.: Censured; Fined $100,000; Required
to retain an independent consultant to conduct a comprehensive review of
the adequacy of its policies, systems, procedures (written and otherwise)
and training relating to market making and retail activity.

Richard William Hunt: Fined $25,000; Suspended 45 days in Principal
capacity only

implemented material change
in business operations by materially increasing the number of equity
securities in which it made market without filing an
application for approval with FINRA;

failed to maintain
electronic correspondence;

failed to conduct an independent testing of its Anti-Money
Laundering (AML)
compliance program;

failed to develop and implement an adequate supervisory system for
detecting and reporting suspicious activity;

failed to establish and implement policies, procedures and internal
controls reasonably designed to achieve compliance with the Bank
Secrecy Act, including an adequate Customer
Identification Program (CIP);

failed to report a
disclosable matter;

failed to timely report disclosable matters;

reported municipal securities transactions late, without a price and
with an incorrect price.

George Randy Cupples: Suspended 30 business days in FINOP capacity only

Pamela Cathy Ohab: Suspended 30 business days in FINOP capacity
only

Bill Singer's
Comment: Another one of these "once again" violations that I
have been highlighting this year. Bottom line, if you engineer a
material change to your member firm's business (or you are involved on the
buyer's/investor's side of such a change), please make sure that someone
has notified FINRA in advance of the PROPOSED change -- and then make sure
that you get FINRA's approval and that your Membership Agreement is
modified as required.

Beerbaum, while suspended
as a principal of the firm , actively engaged in the management of the
firm 's securities business, and performed executive and
supervisory responsibilities despite his suspension as a principal. See
SEC decision at http://sec.gov/litigation/opinions/2007/34-55731.pdf

Acting through Mills and in participation with other registered
representatives of the firm, the Firm sold common stock iin contravention
of the terms of the private placement memoranda. Specifically,
public customers who participated in the offering were instructed
to make their checks payable to a company Mills owned and controlled that
was not a FINRA member firm, or to wire
transfer funds directly to the company's bank account. By directing
customer funds to the company's account, the customer funds were commingled
with funds unrelated to the offering. Further, acting through
Mills, the Firm used the proceeds in a manner contrary to the
representations made to the customers in the private placement memoranda.
The firm and Mills failed to fully respond to NASD requests for
information and documents.

Griffin, Mills & Long, LLC : Expelled

and Walter Andrew Mills: Barred

Bill Singer's
Comment: Clearly, 2007 continues to maintain FINRA's focus on escrow
violations. Folks, the funds are supposed to go into an independent
bank account subject to a written escrow agreement. If the funds are
going into any other type of account, you're likely going to have a
violation.

Although Wise acted as the escrow agent for money-market escrow
accounts, he did not disburse the
additional interest earnings that were received into the escrow
account after the transaction closed and escrowed funds had already been
disbursed to the parties. Without the authorization or consent of the
affected parties, Wise transferred
$44,000 in post-closing earnings to a single consolidated account in his
name, with his member firm identified as the registered dealer on
the account statements.

Wise guaranteed his own signature on wire transfer instruction letters
he transmitted to mutual fund companies which required him to obtain a
signature guarantee for letters that requested transfer of funds held in
escrow in order to verify the authenticity of the escrow agentís
signature. Wise fabricated a
signature guarantee on wire transfer instruction letters by
altering the appearance of his signature and applying the bank's medallion
guarantee stamp. Wise opened securities accounts at other brokerage firms
without notifying his member firming writing that he had opened the
accounts and also failed to disclose his affiliation with his member firm to
the other brokerage firms.

John Griffin Wise: Fined $8,500; Suspended 9 months

Bill Singer's
Comment: It's nice that the escrowed funds were in an interest-bearing
account, but no one gets to benefit from that accrual without written
agreements to that effect. But, if you're going to fabricate
signature guarantees, why let a little thing like a piece of paper get in
the way of $44,000?

Thomas accepted $2,600 in loans
from a public customer (not an immediate family member) in
violation of his member firmís written procedures prohibiting registered
persons from borrowing from customers, except for immediate family members
for non-securities purposes. The customer was not
an immediate family member.

While taking the Regulation Element of NASD's Continuing Education
Requirement exam at a testing
center, he reviewed email messages and made telephone calls on his wireless
hand-held device contrary to the exam instruction's Rules of Conduct.
Nguyen failed to respond to an NASD request for information.

Long Hoang Nguyen: Barred

Bill Singer's
Comment: Did he also play any forbidden ringtones?

Peter John Murphy
AWC/#20050003239-06/August 2007

Murphy aided and abetted an individual's fraudulent and manipulative
bond parking scheme involving pre-arranged,
non-bona fide sales and purchases of zero coupon subordinate municipal
bonds with a face value of two million dollars. Murphy obtained
permission from his member firm to make a proprietary purchase but did
not inform his supervisor that he would hold the bonds as a favor until
his friend repurchased the bonds and did not disclose that he had been
guaranteed a profit when the bonds were repurchased. Murphy was
directed to purchase the bonds from a third party with a same-day
settlement rather than the standard settlement of three business
days after the trade, and did not inform his supervisor that he made the
purchase from a third party instead of his friend. The bonds were
repurchased at an increased price generating a profit to the firm and
Murphy.

Peter John Murphy: Fined $10,000 (but consideration given to his
financial status); Suspended 90 days in all capacities

Bill Singer's
Comment: Haven't seen a good, old-fashioned repo case in some time.
Nice to see that somethings live on.

Martin borrowed $10,000 from
public customer in contravention of her member firm's written
supervisory procedures prohibiting borrowing money from customers, absent
written authorization.

Dawn Anita Martin: Fined $5,000; Suspended 90 days in all capacities

Andrew Joseph Lynch
AWC/#2006006900201/August 2007

Lynch received an insurance application from joint applicants
who signed their names on the wrong line of the application, crossed out
the misplaced signatures, signed the customers' names on the correct line
of the application, without the customers' authorization or consent, and
submitted the application to the insurance company.

Bill Singer's
Comment: Oh, how these cases trouble me. On the one hand, I think a
three month suspension for simply "fixing" an admittedly
erroneous entry (which everyone understood as such and knew what was
intended) is over-kill. On the other hand, there are few things more
troubling in our industry than forgery or filling in the blanks.
Still, all things considered, seems to me that a 30 day suspension plus
the fine would have been okay here -- but I do appreciate and understand
the NASD's concerns. Let's call this a push.

Frank Enrique Lumpuy
AWC/#2006005568401/August 2007

Lumpuy shared in a public
customer's loss without prior written authorization from his member
firmer the customer before making the deposit into the customer's bank
account.

Frank Enrique Lumpuy: Fined $5,000; Suspended 10 business days in all
capacities

Kuzma conducted financial services workshops and engaged email house to
mail workshop invitations to prospective customers without
advising his member firm that he was conducting the workshops or having
invitations sent. Kuzma failed to request approval for the
invitations by a registered principal of his firm prior to use; and the
workshop invitations did not include all relevant information, were
incomplete, and were not fair and balanced.

Alan Edward Kuzma: Fined $5,000; Suspended 20 business days in all
capacities

David S. Jarnoti
AWC/#2007007962001/August 2007

Jarnoti signed a family member's name on change of address forms for
individual accounts she held at his member firm without her permission or
knowledge. Jarnot was attempting to change
her home address to his address.

David S. Jarnoti : Barred

Steven Wayne Grossman
AWC/#2005001180201/August 2007

Grossman churned and excessively traded public customersí accounts
that resulted in commission-to-equity
ratios in excess of 30 percent. Grossman recommended and effected
securities transactions in customersí accounts without
reasonable grounds for believing that the transactions were suitable
in view of the size and frequency of the transactions, nature of the
accounts and the customersí financial situation, investment objectives
and needs. Grossman altered his member firmís record relating to a joint
account of customers by deleting
certain securities positions from the customersí Form 1099 and provided
the altered document to their accountant. Grossman created a
schedule of gains and losses for the customersí account that contained
false information.

Steven Wayne Grossman: Barred

Anthony Mario Faiola
AWC/#2006005577001/August 2007

Faiola and another registered representative sold $2,050,000 worth of
limited partnership interests in a hedge
fund that Faiola co-owned and controlled to public customers
without prior written notice to, or prior written approval from, his
member firm.

Anthony Mario Faiola : Barred

John William Eugster
AWC/#20050022712-01/August 2007

Eugster participated in a private securities transaction for
compensation without prior written notice to, and written permission from,
his member firm.

John William Eugster: Fined $10,000; Suspended 2 months in all
capacities; Required to demonstrate to FINRA that he has relinquished
his entitlement to any profits realized by a limited liability company
(LLC) he formed and managed upon the distribution to its members
securities acquired in a private placement and any document pertaining to
the LLC requiring revision or amendment to effect his relinquishment of
his entitlement to any portion of profit has been revised or amended as
evidenced by the submission to NASD of the document(s) in their original
and revised or amended forms.

Ehrenberg borrowed $120,000
from a public customer and failed to inform his member firm.
Ehrenberg willfully failed to amend his Form
U4 to disclose material information. Ehrenberg failed to respond to
NASD requests for information.

Donald Fred Ehrenberg Jr. : Barred

Brian James Dunn
#2006004809201/August 2007

Dunn submitted false expense
reports to his member firm and was reimbursed for the expenses,
thereby converting firm funds for his own use. Dunn failed to respond to
NASD requests for information.

Cahn borrowed funds from a public customer
in
violation of his firmís policy prohibiting registered employees from
borrowing from, or lending to, public customers with the limited
exception of immediate family members. Cahn
settled a customer complaint without his member firmís knowledge or
authorization. The sanction was based on findings that Cahn
failed to respond to NASD requests for information and documents.

Jeffrey Jay Cahn: Barred

John Charles Burch (Supervisor)
AWC/#2006004468101/August 2007

Burch deposited $6,000 into a bank account for purposes of avoiding
a transaction reporting requirement under federal law, knowing that
the property involved in the financial transaction represented the
proceeds of some form of unlawful activity.

Bingham and Butts failed to cause their member firm to maintain its required
minimum net capital. They prepared and/or were responsible for the
preparation of inaccurate net capital computations, trial balances and
general ledgers for their member firm. They prepared and/or caused the
preparation of inaccurate FOCUS
reports for their member firm and filed the inaccurate reports with NASD.
Bingham and Butts failed to submit timely notice to NASD of their firmís
net capital deficiency. Bingham failed to file his member firmís annual
audit report in a timely manner.

Acting through Best, the Firm used the instrumentalities of interstate
commerce to conduct a securities business while failing to maintain its
minimum required net capital.

Glenn Edward Best: Fined $5,000; Suspended 30 business days in FINOP
capacity; Required to requalify as a FINOP

Michael Clark Behrend
AWC/#20060069702-01/August 2007

Behrend created phony
correspondence and forged signatures on requests for disbursements of
funds from insurance and investment accounts held at his member
firm and its affiliate in order to obtain money and property by false
means. Behrend requested that checks drawn on customer accounts be sent
directly to him, forged the customersí signatures on the back of the
checks and added his own signature on the back of the checks. He deposited
$20,460.99 into his own bank accounts through this scheme and never
returned any of the funds to customer accounts. Behrend failed to respond
to NASD requests for information.

The Firm effected both a 100
percent change in its direct ownership and a material expansion of its
business operations without seeking and obtaining approval for
these changes as NASD Rule 1017
required. The Firm added branch
offices without notifying NASD within 30 days of their opening as
NASD By-Laws required, and failed to have reasonably written supervisory
procedures in place to ensure compliance with NASD Rule
2711. The Firm conducted a securities business when the firmís
capital was below the minimum amount required. The Firm failed to timely
report customer complaints and did not report additional complaints
as NASD Rule 3070(c)
required; and failed to amend, and timely amend, Forms
U4 or U5 for registered representatives to reflect customer
complaints. The Firm conducted an options business at a branch office with
a supervisor who was not registered as either an options principal or as a
limited principal Ė general securities sales supervisor.

Westrock
Advisors, Inc.: Censured; Fined $42,000

Bill Singer's
Comment: Ouch! I've been doing these sales of BDs for nearly two decades
and one of the first things I remind the buyer and the seller is that the
sale will constitute a "material change" under the Membership
Agreement and to make sure that the NASD is notified of the proposed
change. You cannot simply finalize the transaction and then send the
NASD notice. The NASD (now FINRA) has to review and approve the
transaction. This oversight often causes a major headache in terms
of approval delays and possible sanctions. Make sure it's on your
punchlist when you buy/sell a BD.

The Firm permitted associated
persons to function as research analysts without being properly registered
with NASD and issued
research reports the unregistered analysts prepared. The Firmís
written supervisory procedures were not reasonably designed to achieve
compliance with NASD Rule 2711
in that the procedures did not include steps to monitor and achieve
compliance with the rule.

The Firm failed to

retain its emails in an
easily accessible place;

implement its CIP in
connection with new customer accounts as part of the firmís
compliance with the requirements of the Bank
Secrecy Act, and the firmís written supervisory procedures
relating to the CIP did not accurately describe its AML
program as implemented. (The Firmís implementation of its independent
testing was inadequate in that it failed to retain all documentation evidencing
areas that had been reviewed and tested, and it failed to detect the
deficiencies with its CIP. The Firmís written procedures did not
address how often its
independent tests needed to be conducted and did not address
how the firm would handle situations in which independent testing was
conducted by a person who reported to a person whose activities he or
she was testing).

Janco Partners, Inc. : Censured; Fined $60,000

Bill Singer's
Comment: Seems we have a couple of firms that haven't been on this planet
for a few years. Read the Source case for some
similar problems. Here, it's a simple proposition: You cannot
serve as an analyst if you are not registered and you can't issue reports
from unregistered analysts. Period.

The Firm participated in private
placement offerings of stock and failed
to transmit investor funds to an unaffiliated bank to hold in escrow until
the offering contingency was met but, instead, investor
checks were either made payable to and held by a law firm as escrow agent
or were made payable to the firm and deposited into a bank account without
a written agreement with the bank to hold the funds in escrow. The
Firm the instrumentalities of interstate commerce to engage in the
securities business while failing to maintain required minimum net
capital.

Grant Bettingen, Inc. : Censured; Fined $10,000

Bill Singer's
Comment: All of sudden we're seeing more escrow problems. See the Wise
case..

implement an adequate AML
compliance program in that it failed to provide, or to document that
it had provided, adequate AML training for either the firmís
designated AML officers or the firmís employees;

establish and implement an adequate customer identification program
(CIP);

independently test its AML compliance program;

establish and implement an adequate CIP in that the firm did not
establish or implement adequate policies or procedures to conduct
additional due diligence for their higher risk accounts, including
foreign account-holders;

In addition, the Firmís procedures identified various AML ďred
flags,ď including large
wire transfers and deposit of large amounts of low-priced securities,
but failed to identify and analyze these transactions to determine if they
were in fact suspicious and were required to be reported on a
SAR-SF.

First American Capital and Trading Corporation fka STC Securities, Inc:
Censured; Fined $30,000; Required to have all its registered persons
register for three hours of anti-money laundering (AML) training.

Bill Singer's
Comment: Nothing gets a regulator's goat more than to see that you have
drafted procedures but not followed them. Of course, as we've
discussed throughout this year, once NASD says there was a "red
flag" and you missed it, well, that's going to be a major
to-do.

The Firm executed transactions in municipal securities that were not
reported to the MSRB within
15minutes of execution time, and transaction information was reported
inaccurately. The Firm failed to

establish written supervisory procedures to ensure the timely and
accurate reporting of municipal securities transactions within 15
minutes of trade execution;

enforce its written supervisory procedures that required that
a

principal of the firm print
and review all incoming electronic correspondence;

the firm provide notifications to NASD prior to implementing
electronic storage media for primary record retention purposes for
its electronic correspondence; and

the firm capture, retain and preserve, in a readily accessible
location, originals of all electronic communications originating
from and received by one of its branch offices; and

enforce its written supervisory procedures regarding email
retention and review at one of its branch offices.

brokersXpress, LLC : Censured; Fined $50,000

American SkandiaMarketing, Inc.
AWC/August 2007

The Firm failed to maintain and preserve all of its electronic communications as
SEC Rule 17a-4 requires. The findings stated that the firmís supervisory
system and procedures were not reasonably designed to ensure that the
required written consent for Web CRD searches was retained by the firm.

Acting through Blankenship, the Firm sent
drafts of a research report prior to its issuance to the subject company that
included the research summary, research rating and price target.
Blankenship, as the author of the research report, was restricted from
purchasing the companyís stock 30 days prior to the issuance of the
report but acquired stock from the
company prior to issuance. Inconsistent with his buy recommendation
in the research report, Blankenship then sold his shares. Acting through
Blankenship, the Firm issued the research report and failed to disclose
Blankenshipís acquisition of the shares of stock from the company.

Acting through Boesel, the Firm failed to implement the firmís
written supervisory procedures to ensure that the firm and its employees
complied with the provisions of NASD Rule 2711.

Bill Singer's
Comment: In the past ten years, has there been any more-publicized new
rules than those pertaining to research? You can't sent out a draft
of a report to the covered company before publication. That's
basically chiseled into stone. Of course, it's also not exactly a
brilliant idea these days to obtain stock from a covered company (before
you send out a supposedly pristine piece of research) and then sell the
damn shares while your report is pumping them! Now I do allow for
the fact that some folks have been visiting the moon since Spitzer was the
NYAG and now the state's Governor. So that might explain the
confusion. See Janco for a similar research
violation.

The Firm and Marquez failed to
employ a registered Financial and Operations Principal (FINOP). The
Firm was deficient in that it had failed
to employ at least two registered general securities principals with
respect to each aspect of the firmís investment banking and securities
business for more than two years and 10 months before applying for a
waiver of the requirement. The Firm failed to timely file a Financial and
Operational Combined Uniform Single (FOCUS) report.

Bill Singer's
Comment: Two comments. First, you must have a FINOP (and if you
can't afford a full-timer, there are folks who serve as what has
pejoratively become known as a rent-a-FINOP) and the rule is that you must
have at least two General Securities Principals (but you can apply for a
waiver). Second, you mean to tell me that after nearly 3 years the
good old NASD (now the more impressive sounding FINRA) didn't notice that
one of its member firms had no FINOP and lacked two GSPs?

Acting through Chancler, the Firm permitted Still to head its
Investment Banking Department and to engage in conduct that required
registration as a general securities principal, even though he was not
registered with NASD in any capacity. The Firm failed to timely
report transactions in Trade Reporting and Compliance Engine (TRACE)
eligible securities.

Boenning & Scattergood, Inc., Thomas John Chancler (Principal) and
James Still (Principal): Censured; Firm fined $20,000 (Chancler and Still
jointly and severally liable for $15,000)

Bill Singer's
Comment: We're seeing a noticeable increase in both "parking"
cases and unregistered persons. Sometimes the failure to register
situation arises because of a failed transfer of prior registration (which
wasn't caught or someone thought was but never checked). With
year-end approaching, this might be a good time to do a routine check of
registrations.

The Firm failed to file, in a timely manner, Form
U4/U5 amendments and initial Form U5 termination filings, and did
not have adequate policies or procedures designed to ensure reportable
items were forwarded to the firmís registration department and filed in
a timely manner with NASD. The Firm's policies and procedures failed to
enumerate which types of events are reportable, had no system to monitor
timely filing of Forms U4/U5 and to provide for supervisory reviews for
compliance. Brooks and McPherson had assigned responsibility for filing
amendments to a non-registered
clerical employee, and the firm did not have adequate policies or
procedures with respect to the individualís duties. The Firm submitted
Form U4/U5 amendments with electronic signatures before a registered
principal of the firm received, reviewed and approved the amendments.
Brooks signed U4/U5 amendments although he did not supervise registration
functions related to filing of Forms U4/U5 or amendments, and approved of
the firmís registration department submitting Form U4/U5 filings with
his electronic signature before he received, reviewed or signed these
filings.

Brookstreet Securities Corporation: Censured; Fined $200,000 ($25,000
jt/sev with McPherson); Required to retain an independent examiner to
conduct an audit to assess the effectiveness of its system and procedures
for ensuring the timely filing of amendments to Uniform Applications for
Securities Industry Registration or Transfer (Forms U4) and Uniform
Termination Notices for Securities Industry Registration (Forms U5) and
initial U5 termination filings, and required to implement and certify
changes in its supervisory system and personnel.

Yura instructed another supervisory principal to create
a document stating that a registered representative had been suspended for
resolving an incident with a public customer by paying the customer money
when he had not been suspended. The document was to be placed in the
representativeís file at a branch office. Yura falsely advised his firmís
chief compliance officer that the representative had been suspended.

Martin Yura: Fined $10,000; Suspended 1 year in all capacities

Bill Singer's
Comment: Wouldn't you love to know what started this mess? Oh
children. Behave yourselves.

Abigail Mann Whittle
AWC/#2006006019001/July 2007

In order to transfer a public customerís account to her member firm
from another broker dealer, Whittle contacted the other broker dealer and impersonated
the customer over the telephone without the customerís knowledge
or consent.

Abigail Mann Whittle : Fined $5,000; Suspended 20 business days in all
capacities

Bill Singer's
Comment: Okay, but was it at least a good impersonation?

Vaughn falsely represented to an insurance company that a public
customer had not received $74,240.41 due to him from the liquidation of
his fixed annuity when in fact, the customer had received the payment and
used these proceeds to purchase a fixed annuity through another insurance
company. The insurance company mailed a second check to Vaughn, who forged
the customerís endorsement to the check and deposited the check to his
personal bank account, thereby converting the funds to his own use
and benefit. Vaughn failed to respond to NASD requests to appear for an
on-the record interview; and willfully failed to amend his Form U4 to
disclose material information.

Ronald Vaughn: Barred

Bill Singer's
Comment: Yeah, but the customer did purchase that fixed annuity from
another insurance company. I mean you can't just let the client get
away with that. If you have to forge the client's name and steal his
money in order to teach him or her a lesson, what's wrong with that?
Bet you the client will think twice before taking his business elsewhere
in the future. (For those of you who can't tell --- I'm being
incredibly sarcastic). Moi????

Eduardo M. Tejeda
AWC/#2005003386301/July 2007

Tejeda provided a company with letters on his member firmís
letterhead that contained false and misleading representations confirming
the companyís credit line and funds availability, although he
knew the company planned to use the letters in an attempt to secure a
loan, the company had no credit line at the firm and had not established
an account with the firm.

Kavalec borrowed $25,000 from
a public customer in contravention of his member firmís written
supervisory procedures specifically prohibiting borrowing money from
customers.

John Francis Kavalec : Barred

Kenneth Cecil Holtsclaw (Principal)
AWC/#2006006831001/July 2007

Holtsclaw falsified business
expense reports, receiving $282.72 to which he was not entitled,
because he requested reimbursement
for restaurant gift cards or meals for unauthorized guests in addition to
reimbursement for actual meal expenses in violation of his member
firmís written supervisory procedures. Holtsclaw failed to appear
for an NASD on-the-record interview. (NASD Case )

Guzman borrowed $3,000 from a
public customer in violation of her member firmís written
procedures that prohibited borrowing money from customers under any
circumstances.

Adeline Aguilon Guzman : Fined $5,000;Suspended 10 business days in all
capacities

Joseph Marshall Francis Jr.
AWC/#20060066655-01/July2007

Francis opened brokerage
accounts on a foreign citizenís behalf without disclosing that the
citizen was the accountsí true beneficial owner. Francis failed
to disclose to the member firms at which the accounts were opened that he
was a registered representative of another firm and lied to a
representative of one firm about the source of the funds he used to
open the account. Francis failed to properly notify his member firm of the
existence of the outside
securities accounts. Francis engaged in an outside
business activity without notifying his member firm.

Joseph Marshall Francis Jr. : Barred

Marlene Hall Foster
AWC/#20050002644-02/July 2007

By passively participating in
a companyís recruitment of new investors, opening new accounts for them,
accepting customer funds and orders, and later complying with the stock
promoterís instructions on when public customers were to purchase stock
in the company, Foster negligently
assisted the promoter in artificially increasing the companyís stock
price.

Bill Singer's
Comment: What????? "Negligently assisting a promoter to artificially
increase prices?" What does that even mean? And how does
one even begin to define what is "passively" participating as opposed
to regular participation? If you carefully read this case, Foster
opened new accounts (legal); accepted customer funds and orders (legal),
and then did something referred to as "complying" with a
promoter's instructions on "when" customers were to purchase the
stock (not sure whether that's a violation or not).

Despite knowing an individual
was not registered with NASD, Dykes instructed the individual to contact
public customers and discuss investments with them. The individual
gave Dykes an application and other documents for the transactions
involving a public customer, Dykes assigned the accounts to other
registered representatives who had no involvement with the transactions
and instructed one of the registered representatives to give
the unregistered individual a $2,000 personal check as compensation
for the sale of the annuities.

Doraine effected securities transactions in a public customerís
account pursuant to instructions
from a third party who, although verbally authorized to trade the
account, was not authorized in writing to execute transactions in the
account.

Charles Lawrence Doraine: Fined $5,000; Suspended 5 business days in
all capacities

DeAngelis engaged in private
securities transactions and maintained an outside
securities account without prior written notice to his member firm.
DeAngelis failed to respond to NASD requests for information.

recommended the purchase of new-issue, closed-end fund shares to
customers and then within two weeks or less, recommended their sale to
purchase other securities (which experienced immediate price
declines);

sold the funds before the price had a chance to recover, causing the
customers to suffer losses from this unsuitable short-term buying and
selling activity; and

engaged in unsuitable short-term trading of Class B shares of mutual
funds resulting in the customers having to pay CDSC.

Customers suffered $88,242 in
losses from this unsuitable short-term buying and selling activity, while
Copeland received net commissions of $37,000.

Robert Scott Copeland: Fined $7,500;Suspended 6 months in all
capacities; Ordered to pay $88,242 in restitution

Paul Jude Casella (Registered Principal)
#ELI20040411-01/July 2007

Casella caused his member firm to charge
customer accounts a $150 fee for the costs associated with his firm
changing clearing firms, although none of the firms actually
incurred the costs. Casellaís firm would not
have met its net capital requirement but for the $91,950 capital infusion obtained
through the assessment of the $150 fee.

Paul Jude Casella: Fined $10,000; Suspended 1 year in all capacities

Bill Singer's
Comment: What???!!! You can hit your accounts with a bogus $150 fee
and use that money to keep your firm afloat, and all that warrants is a
$10,000 fine and a one year suspension? Compare with the Bruno
and Bremmer cases below (both resulted in Bars) and
explain what the difference was?

Carlton submitted forged and
falsified documents to his member firm, causing its records to be
falsified. Carlton misused $33,000 of public customersí funds by causing
unauthorized transfers from the customers family trust account to other
customer accounts; and he engaged in unauthorized
trading in a public customerís account without the customerís
knowledge, authorization or consent. Carlton forged, or caused to be
forged, customersí signatures on a letter of authorization that directed
transfer of $5,250 out of the customersí family trust account.

Eric Whetham Carlton: Barred

Stephen Ennio Capella
AWC/#2007008076101/July 2007

Capella received a completed application for an insurance policy
from a public customer that was signed incorrectly. Capella
crossed out the misplaced signature, signed the customerís name on the
correct line of the application without the customerís authorization or
consent and then submitted the application to the insurance
company. T

Bill Singer's
Comment: I have long railed against forgery (and the NASD's many
euphemisms for same) but this case troubles me -- even if only a
bit. I fully respect the decision to sanction this conduct because
you simply do not want RRs signing customers' names to anything, without
the customer's prior authorization. Moreover, even with prior
authorization, it's far better conduct to absolutely prohibit such an accommodation,
which is what many firms follow. Okay, so now we get to the big
HOWEVER. Going solely on the basis of what the NASD reported, I would have
agreed with the imposition of the $5,000 fine (although $1,000 would have
been fine with me). However, I see no reason to impose a 3 month
suspension given the facts. And for those who believe a suspension
is necessary, I would suggest that one week or one month would have been
more than appropriate.

While working in a branch bank affiliate of her member firm, Bremmer
"removed $7,800 in cash from
the vault and her cash drawer without authority and converted the funds to
her own use."

Shannon Lynn Bremmer: Barred

Bill Singer's
Comment: What wonderful regulatoryspeak! Where you and I would
simply say that Bremmer "stole" the cash, the NASD manages to
expand that term into removing the cash without authority and converting
the funds for her own use. It must be nice to have such a large
dictionary at one's disposal.

Timothy Behany (Registered Supervisor)
#E9B2003026301/July 2007

Behany improperly obtained
contingent deferred sales charge (CDSC) waivers for public
customers in connection with mutual fund redemptions by falsely
representing on his member firmís electronic order entry system that the
customers were disabled. As such, several mutual fund companies were
deprived of fees to which they were otherwise entitled; and his member
firmís books and records relating to redemptions to contain false and
misleading information regarding the customers.

Timothy Behany: Fined $40,000; Suspended 2 years in all capacities and
required to requalify

August performed Web CRD
searches on individuals who were not seeking employment with his
member firm and falsely affirmed to Web CRD that he had obtained and would
keep the required written consent in connection with those searches on
file. Augusta failed to comply with his member firmís written
supervisory procedures to retain hard copies
of business-related email correspondence from outside email accounts in
a file at his member firm. Augusta permitted associated persons to act in
the capacity of research analysts
without being properly registered with NASD. Finally, Augusta failed
to review registered representativesí business-related email
correspondence when they used outside email accounts.

Bill Singer's
Comment: And yet another Web CRD case this month. Once again, if the
guy or gal isn't registered with your firm, you're supposed to get written
consent to conduct the search. And, as in this case, if they're not
even seeking employment with your firm, then you probably shouldn't even
think of checking them out on CRD. Why? Well, geez, let's
think about it for a second -- you're accessing of the records is likely
leaving a footprint that will be traced back to you and/or your firm.

Flynn Lambert Andrew (Principal)
AWC/#E0420040369-05/July 2007

In letters and emails sent to
the public, he used the phrase ďguaranteeĒ or ďguaranteedĒ regarding
specified rates of return without making the necessary commensurate
disclosures about the issuerís claims-paying ability or that there might
be holding periods to obtain the rates of return. Andrewís
communications compared variable annuities and mutual funds without the
necessary disclosures that there are numerous mutual funds available and
other costs and restrictions associated with variable annuities that might
not apply to mutual funds.

Flynn Lambert Andrew: Fined $10,000; Suspended 10 business days in all
capacities

The Firm's written supervisory procedures were not reasonably designed
to ensure that the firm obtained and retained the required
written consent for pre-registration searches on Web CRD and
because of its deficiencies, the firm failed to obtain and/or retain the
required written consent in connection with Web CRD searches of at least
eight individuals. The Firmís written supervisory procedures were not
reasonably designed to ensure compliance with the email
retention and review requirement, and that it failed to maintain
and preserve all of its business-related electronic communications as SEC
Rule 17a-4 requires. The findings also stated that it failed to implement
a written AML program reasonably designed to achieve compliance with the
requirements imposed by the Bank Secrecy Act and the regulations
promulgated thereunder and specifically failed to establish and implement
an adequate Customer Identification Program. The findings also included
that the firm permitted associated persons to act in the capacity of
research analysts without being properly registered with NASD, and issued
several research reports the associated persons prepared. (NASD Case )

Bill Singer's
Comment: NASD remains on a tear over the improper use of its Web CRD
system. If the guy or gal isn't registered with your firm, you're
supposed to get written consent to conduct the search.

The Firm failed to preserve
copies of internal and external electronic mail communications. The
Firm failed to timely report

statistical and summary information regarding customer
complaints; f

report settlements in
excess of $25,000 of customer claims against the firm and people
associated with the firm; and f

the settlement of a customer claim in excess of $15,000 against
people associated with the firm.

Finally, the Firm failed to amend, or ensure the amendment of, Forms
U4 and U5 to disclose customer complaints and the resolution of the
complaints.

Sandgrain Securities, Inc. : Censured; Fined $50,000; Required to
provide to NASD written certification and documentation that any filings
required under NASD Rule 3070 and amendments to Uniform Applications for
Securities Industry Registration or Transfer (Forms U4) or Forms U5 and
are the subject of this NASD disciplinary action have been completed.

The Firms committed numerous separate violations of NASD rules,
including failures to

file advertisements and
sales literature in a timely manner with NASD;

have a registered principal
approve advertisements and sales literature prior to use with
the public;

comply with their recordkeeping
obligations for communications with the public;

establish, maintain and enforce supervisory systems and procedures
reasonably designed to achieve compliance with NASD rules governing
filing, approval and recordkeeping with respect to advertising and
sales literature;

file pieces in a timely manner with NASD (and lacked adequate
systems and procedures to monitor the timeliness of NASD filings);

take sufficient remedial actions in response
to written warnings from NASD that its filings were not timely.

The firms used advertisements with the investing public before a
registered principal approved the sales literature for use that went
largely undetected by the firms, as they had no
systems or procedures to record when advertisements were first used with
the public, and their systems and procedures to detect when
advertisements were used prior to the requisite internal approval were not
adequate. The Firms failed to create and maintain reliable records of when
advertisements were approved by a principal, and a flaw
in their computer system caused inaccurate approval date records to be
created and maintained. Finally, the Firms failed to retain records
of filings with NASDís Advertising Department and filed inaccurate dates
of principal approval with NASD.

The Firmís system and procedures were not
reasonably designed to ensure that all registered representatives used the
firmís electronic server for business-related electronic communications.
The Firm failed to provide for reasonable follow-up and review on
indications that some of its registered
representatives were using external email accounts;and as the
result of the supervisory deficiencies, the firm failed to maintain and
preserve certain of its electronic communications as SEC Rule 17a-4
requires. The Firm failed to implement a reasonable supervisory system and
written procedures for follow up and review to ensure that a registered
representative conducting business at a bank
location completed forms required in accordance with NASD Rule
2350(c)(3) and provided the forms to public customers.

Bill Singer's
Comment: Another firm gets hit for external email accounts. And just
allow me this peevish comment: If this is such a growing regulatory
issue (which the increasing numbers of cases would suggest), then why
doesn't NASD help us all out a bit --instead of writing a mystery
novel. I don't think that most folks can easily think of a way to
detect that their firm's RRs are using external email accounts. In
this case, NASD says that there were "indications" of external
accounts being used. I can think of a few things that might give
such a head's up, but wouldn't it have been more helpful if NASD explained
what such red flags are? At the end of the day, is this an academic
exercise or are we all supposed to be learning something to aid us in
remaining compliant?

The Firm permitted an
individual to maintain his registration as a general securities
representative through his purported association with the firm, when in
fact he was not actively involved
in the firmís securities or investment banking business, or otherwise
functioning as a firm representative.

Certain communications with the public contained several deficiencies
in that: the firm failed to

provide evidence that a registered
principal approved its Web site prior to use;

file communications that contained discussions of options, mutual
funds and U.S. government securities;

state the name and address of the person from whom current options
disclosure documents could be obtained on pieces of the firmís
promotional materials that contained discussions of options;

supplying a sound basis for evaluating the statements made in some
of the firmís communications; and

meet the disclosure and content requirements in NASD Conduct Rule
2711(h) in research reports
that it prepared and distributed.

Joseph Gunnar & Co. LLC : Censured; Fined $35,000

Bill Singer's
Comment: And yet another "parking" case this month! Word
to the wise --- and the not so wise. We also see another firm
getting hit for supervisory deficiencies pertaining to its web site.

The Firm held customer stock
certificates in a safe on its premises, despite a provision in its membership
agreement requiring that the firm not safe keep customer
securities. As a result of the firm holding customer securities, it
conducted a securities business while failing to maintain its minimum net
capital requirement. The Firm caused draft
research reports containing price targets and/or ratings to be sent to
companies that were the subjects of the reports when they should
not have been sent.

Griffin Securities, Inc.: Censured; Fined $20,000

Bill Singer's
Comment: This is an interesting twist and one I haven't seen in
years. If you look at your Membership Agreement, most of you will
see that you are an introducing firm and not permitted to maintain/receive
cash or securities. Moreover, your Net Capital requirement is
actually geared to the fact that you are not maintaining cash/securities
-- as such, you are permitted to maintain a lower dollar level.
However, if you hold certs (and put them in a safe on premises!), then you
will not only be in violation of your Membership Agreement prohibiting
such activity, but you will also blow you Net Cap requirement and find
that a much higher obligation is retroactively imposed.

Gregory, Zent & Swanson, Inc.
AWC/#E8A2004095002/July 2007

The Firm failed to

retain a copy of a discretionary
authorization agreement for a customerís discretionary
account;\

maintain a copy of a customerís
written complaint;

adequately and properly supervise unregistered associated persons
who were permitted to receive and direct the correspondence the firm
received; and

provide training to properly identify customer complaints related to
securities activities and to forward them to the firmís appropriate
registered principals so they could be properly reviewed, maintained
and timely reported to NASD.

The Firm's supervisory system and written policies and procedures did
not adequately ensure compliance with NASD rules relating to the payment
or reimbursement of non-cash compensation. The firmís associated persons
received non-cash compensation from
insurance companies in connection with the sale of variable annuities and
investment company securities that violated NASD rules, but the
firm approved or failed to detect non-cash compensation programs. The Firm
failed to properly preserve emails
in its home office and failed to properly journal email for custodians in
its Office of Supervisory Jurisdiction (OSJ).

perform an annual evaluation and prioritization of its training
needs and failed to develop a written
training plan;

have a reasonable system for email
review although it had established parameters through an automated
system to flag emails that required review (The firm actually reviewed
only some of the emails that met the parameters);

timely conduct branch office
inspections for the branch offices that did not supervise non-branch
locations; and

failed to report many of its municipal securities transactions to
the MSRB.

Colonial Brokerage, Inc. : Censured; Fined $25,000

Bill Singer's
Comment: It appears that the Firm installed an automated system to flag
emails. It appears that the system worked. However, it appears
that human error resulted in the failure to review all flagged emails. I
mean, geez, even if you're only going to go through the motions of such a
review, you would at least think that the Firm would have documented such
oversight. Sort of puzzling that you have a computerized system
flagging messages and then you don't review those messages . . .
particularly given that NASD is so hot and heavy on this electronic
correspondence stuff.

Casimir Capital L.P.
AWC/#2005000863101/July 2007

The Firm failed to timely report statistical and summary information
for customer complaints as NASD
Rule 3070(c) requires. The Firm and its associated persons made
numerous calls to people who had previously requested to be placed on the firmís
do-not-call list, and the firm failed to adequately train its
personnel in the procedures it had established to avoid violations of
do-not-call rules.

Casimir Capital L.P. : Censured; Fined $37,500

Bill Singer's
Comment: Let's see . . . what upsets folks more than asking to be placed
on a DNC list, and then getting called back? Hmmm. Not much of
a surprise that some of these folks likely called up NASD with
complaints. Word to the wise!

permitted a registered person to continue to perform duties that
require registration while his NASD
registration was inactive due to his failure to satisfy the regulatory
element of his continuing education requirements;

failed to develop an anti-money laundering (AML)
program reasonably designed to achieve and monitor compliance with the
requirements of the Bank Secrecy Act and the implementing regulations
promulgated thereunder;

did not have a system to retain email
communications relating to its business that Philipps sent or received
using his personal email account, and failed to preserve copies
of such electronic communications; and

failed to maintain net
capital, in the amount of $5,000, and actually had negative net
capital. (NASD Case )

Bill Singer's
Comment: For all you vocal First Amendment advocates who persist in
telling me that I'm wrong --- please note that NASD considered it a
violation for a Firm to not maintain a system to monitor an RR's
"personal email account" to send business email. And we
see our old friend, "Parking" has raised its head, yet again.

Acting through Hopper, the Firm issued sales literature to its public
customers that omitted material facts and failed
to file the newsletters, which discussed registered investment
companies, with NASDís Advertising Department 10 days prior to first
use.

Bill Singer's
Comment: RRs are always writing to me and asking why they can't just write
up some brochure and send it out at their own expense. Well, here's
one answer -- you need to file newsletters with NASD's Advertising
Dept.

directly or indirectly, by the use of means or instrumentalities of
interstate commerce or of the mails, negligently made untrue
statements of material facts or omitted to state material facts
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading by

distributing, or causing to be distributed, to investors or
potential investors, private
placement memoranda (PPM) that contained material
misrepresentations or omissions, and

failing to supplement or
amend the PPMs during periods in which each remained in
effect so that they did not contain material misrepresentations or
omissions of fact that occurred after the PPMs were issued.

offered and sold securities without registration statements filed
with the Securities and Exchange Commission (SEC).

Acting through Geraghty, the Firm

failed to report a written
customer complaint;

failed to timely report a written customer complaint; and

failed to report the settlement
of customer complaints to NASD that involved payments in excess
of $25,000;

failed to implement, maintain and enforce an effective supervisory
system that would have enabled the firm to comply with federal
securities laws and NASD rules;

failed to implement, maintain and enforce reasonable systems and
procedures to ensure that PPMs did not contain material
misrepresentations and omissions;

failed to ensure that the accounts used for deposit of contingency
offerings the firm conducted complied with SEC Rule 15c2-4; and

failed to retain email records related to its business in compliance
with Rule 17a-4 of the Securities Exchange Act and NASD Rule
3110.

Acting through Robbins, Mathis and Geraghty, the Firm

violated NASD Membership and Registration rules by permitting
Robbins to engage in activity requiring
registration as a general securities principal and a general
securities representative without obtaining the required
registrations;

failed to establish qualified escrow accounts on contingency
offerings as required by SEC Rule 15c2-4 and failed to maintain its
minimum net capital;

failed to preserve complete electronic
mail communications by routinely deleting the contents of electronic
mail folders of all employees who left the firm and deleted portions
of the contents of current employeesí electronic mail folders.

Investprivate, Inc.: Censured; Fined $205,000 ($67,500 of which is jt/several
with Mathis; $40,000 jt/sev with Mathis and Geraghty; and $15,000 jt/sev
with Geraghty); Suspended 60 days
from seeking or accepting new engagements to conduct or participate in the
offer or sale of unregistered securities through any private offering,
private placement or private investment in public equity (PIPE)
transactions for 60 days (ED: the double reference to "60 days"
is in the original). The firm was also required to retain an
independent consultant to conduct a comprehensive review of the adequacy
of the firmís policies, systems and procedures (written or otherwise)
and training relating to the offer or sale of unregistered securities
through any private offering, private placement or PIPE
transactions.

Donald Geraghty (Principal): Fined $40,000 jt/sev with Mathis and the
Firm; and $15,000 jt/sev with the Firm; Suspended 30 days in principal
capacity

Scott Lee Mathis (Principal): Fined $67,500 jt/several with the Firm;
$40,000 jt/sev with Geraghty and the Firm; Suspended 30 days in principal
capacity

Ronald S. Robbins: Fined $10,000; Suspended 10 business days in all
capacities

Bill Singer's
Comment: The sanction on the Firm is interesting. The Firm is
suspended for 60 days from private offerings. Okay, fine . . .
that's a sensible sanction for the underlying problem. Now, when are
we going to see such suspensions imposed on wirehouses? I'll let you know
when I see one.

Roseman failed to establish and
maintain a supervisory system and written supervisory procedures
reasonably designed to achieve compliance with his member firmís
obligation to preserve electronic
communications related to its business. Roseman failed to establish
and maintain written supervisory procedures reasonably designed to achieve
compliance with the firmís obligation to conduct an annual
inspection of each OSJ, to supervise the activities of each
registered representative, in that the firmís procedures did
not address the circumstances that would warrant heightened supervision
of a representative after the representative was hired, and to amend its
registered personsí Forms U4 if the information previously provided
became inaccurate. Roseman did not evaluate and prioritize the firmís
training needs or develop a
training plan.

Taylor submitted falsified
documents to the insurance division of a state regulator that
represented that her insurance licenses were in good standing when in fact
they were inactive due to her failure
to complete continuing education. Taylor failed to timely amend her
Form U4 to disclose material information and that she failed to respond
truthfully during an NASD on-the-record interview.

Marylan Katherine Taylor: Barred

Alison Esther Taylor (Principal)
AWC/#E0420040369-04/June 2007

Taylor failed to reasonably and
adequately supervise registered representatives who violated
various provisions of NASD Rule 2210 and SEC Rule 482 in their communications
with the public. Taylor approved some of the public communications.
Taylor failed to reasonably and adequately supervise a registered
representative with respect to a customer
complaint for a loss relating to an investment that the
representative settled away from the firm, and Taylor failed to create a
written record that there was a problem with the account or to follow-up
with the representative prior to his decision to send a letter to the
customer and make payment to the customer directly. Neither Taylor nor the
representative notified the firm of the issue before payment was made and
the letter was sent.

Alison Esther Taylor: Fined $5,000; Suspended 15 business days in
principal capacity only

Plase Michael Tansil
OS/#2005002229201/June 2007

Tansil made an improper
guarantee to public customers, misused customer funds to cover a
shortfall regarding the guarantee, made material misrepresentations to
customers that their funds would be used for investment purposes, and settled
a customer complaint without his member firmís knowledge or
consent.

Plase Michael Tansil : Barred

James Everett Robson Jr.
AWC/#2006005364001/June 2007

Robson signed a deceased
customerís name to multiple Individual Retirement Account (IRA)
Distribution Request Forms and checks without the knowledge and
consent of the customer or his widow. After forging the customerís
signature, Robson made checks totaling approximately $31,240 payable to
himself and deposited the funds into his personal bank account without the
customerís or his widowís knowledge or authorization, thereby
converting the customerís funds. Robson failed to respond to NASD
requests for information.

James Everett Robson Jr.: Barred

Bill Singer's
Comment: And how do you get the "knowledge and consent" of a
deceased customer? That one I would love to learn!

Fredric Joseph Palmieri
AWC/#2006005437501/June 2007

Palmieri knowingly submitted a false claim to an insurance company requesting
payment for the theft of his automobile when he was aware that the
vehicle had not been stolen.

Fredric Joseph Palmieri: Barred

Bill Singer's
Comment: And this becomes an NASD regulatory matter because of
what????? Just out of curiosity, does NASD staff get terminated for
DUIs or parking in a handicapped zone?

Phillip Earl Nelson (Principal)
AWC/#2006004829701/June 2007

Nelson submitted a handwritten
note to a public customer in which he made a false, exaggerated,
unwarranted and/or misleading claim and an impermissible performance
prediction or projection regarding a variable annuity he
recommended to the customer.

Bill Singer's
Comment: They're making it easy for you folks. No off-the-cuff
handwritten notes on cocktail napkins. No instant messages. No
emails. No mailings. Maybe in a few more months they won't let you
use the telephone. Hmm . . . could semaphores be coming back?

Darrell Craig Lerner
OS/#2005000440701/June 2007

While registered with his member firm, Lerner did not conduct any firm
business but parked his license with
the firm. Lerner engaged in outside
business activities and private
securities transactions while his license was parked. Lerner
failed to disclose a material fact on his Form
U4 and provided false
testimony under oath during an NASD on-the-record interview.

Darrell Craig Lerner : Barred

Bill Singer's
Comment: We haven't seen too many of these parking cases lately -- perhaps
the tide is now changing? Of course, I'm still wondering how Lerner
was engaged in private securities transactions but the level of that
activity was not sufficient to "validate" the need for a
securities license. Seems to me that he may have been able to argue
that he needed to be registered given the possibility that his private
securities transactions would necessitate such status or could result in
business/referrals to his employing BD.

Alexis Casimir Korybut (Principal)
OS/#E072004002301/June 2007

While acting on his member firmís behalf, Korybut failed
to

ensure that his firm
complied with an independent consultantís recommendations to
remedy the deficiencies identified in the firmís prior NASD
settlements;

implement the various
procedures recommended in the consultantís reports;

establish and implement adequate systems and procedures for
monitoring the activities of the firmís
producing branch managers who approved account documentation
and reviewed account activity and correspondence for their own
customer accounts;

designate a registered principal as an office of supervisory
jurisdiction (OSJ) supervisor;

establish and implement procedures for monitoring activities such as
excessive ďcancels and
rebillsď that might serve as ďred flagsď for detecting
possible unauthorized transactions; and

establish procedures in an OSJ for ensuring a registered principal reviewed
outgoing and incoming branch correspondence.

Alexis Casimir Korybut: Fined $25,000; Suspended 15 business days in
all capacities; Suspended 60 days in principal capacity.

Bill Singer's
Comment: As bad as it is to violate a rule, it's even worse to fail to
keep your word when you've promised a regulator to do correct a prior
violation (and then you don't).

Charles James Cuozzo Jr.
#C9B0050011/June 2007 National Adjudicatory Council imposed sanction
following appeal from Office of Hearing Officers Decision.

Cuozzo falsified dates and information on numerous Regulation
60 annuity replacement forms and inserted a false statement on a
public customerís Regulation 60 annuity replacement form, which resulted
in the falsification of a firm document.

Charles James Cuozzo Jr. : Fined $5,000; Suspended 1 year in all
capacities; Required to requalify as General Securities Representative.

Bill Singer's
Comment: Visit this LINK
for more details on Regulation 60 issues:

Carl Thomas Cirillo
OS/#20050000286-03/June 2007

Cirillo employed fraudulent sales practices when, in a private
placement, he recommended and sold to public customers units of a
company that had minimal assets and no business operations and was owned
and controlled by his family member. Cirillo guaranteed
a customer against loss.

Bill Singer's
Comment: Cirillo either had a great lawyer or the NASD has over-blown the
allegations. Frankly, he's lucky to have gotten off with only a
$12,000 fine and a 60 day suspension.

Francis Bart Bertholic Jr. (Principal)
AWC/#2006004272701/June 2007

Bertholic engaged in private
securities transactions without prior notice to, or approval from,
his member firm. TBertholic received $435,000 from public customers to
purchase a promissory note from which the proceeds were to be invested in
real property or to maintain and improve real property and, instead,
Bertholic used the funds for his personal benefit. Bertholic published
newspaper advertisements, a
brochure and a flier, and developed a Web site that did not disclose his
firmís name and were not approved by a registered principal of the firm.
The brochure and Web site did not provide a balanced discussion of the risks
involved in real estate lending; did not disclose risks and
contained false, exaggerated, unwarranted and/or misleading statements.
The Web site presented testimonials from purported
customers who, in fact, had never transacted any business with
Bertholic.

Francis Bart Bertholic Jr.: Barred

Bill Singer's
Comment: An interesting case that explains why individual RRs should not
simply go out and run their own promotional materials. This case is
also interesting in that we see an NASD warning against developing a
Website -- a lot of folks only think of these issues in terms of written
ads and brochures.

Alldredge borrowed money from
public customers while registered with a member firm. Alldredge
submitted false and misleading documentation to his member firm concerning
variable annuity switch
transactions, in which he concealed the fact that the funds for the
new annuity purchase were the proceeds of the liquidation of an existing
variable annuity, and failed to process the transactions as Section
1035 exchanges. Alldredge failed to respond to an NASD request to
give testimony.

The Firm's anti-money laundering (AML) compliance program and written
procedures were not reasonable designed to achieve and monitor
compliance with the Bank Secrecy Act in that

the AML compliance program as a whole was not
ďrisk-basedď when viewed in the context of the firmís
business, and

the geographic locations
of its customers and the procedures for monitoring accounts
for suspicious activity were not reasonably designed to detect such
activity in light of the nature of the firmís business and its
customer base.

The Firm failed to implement its AML compliance program, in that the
procedures required annual training and no
annual training was provided between April 2002 and September
2004, and the firm did not
include all information required by the Bank Secrecy Act, the
regulations promulgated thereunder and its AML procedures on
documentation pertaining to wire transfers and other fund transmittals.

The Firm failed to retain all
electronic communications related to the firmís business and
did not have a supervisory system or written procedures reasonably
designed to detect and prevent failures to retain required
communications.

The Firmís supervisory system and written supervisory procedures,
and its enforcement thereof, were not reasonably designed to achieve
compliance with applicable laws, rules and regulations regarding

the payment of
transaction-based compensation to foreign finders;

compliance with the requirement to conduct an annual
compliance interview with each registered representative;

providing account records
to customers when an account is opened and at specified
intervals thereafter;

compliance with SEC Rule 17a-3(a)(6) concerning the completeness
of order memoranda; conducting required reviews for compliance with ďbest
executionď requirements;

marking order memoranda to identify discretionary
transactions; and

compliance with NASD rules pertaining to communications with the
public in light of the various methods
and languages the firmís representatives used in such
communication.

The Firm paid
transaction-related compensation to a foreign entity not registered as a
broker-dealer and permitted its affiliated individuals who handled the
referral business to function as firm representatives without
registration. The Firm met some, but not all, of the conditions
in NASD Rule 1060(b) for such payments to be permissible.

White Pacific Securities, Inc. : Censured; Fined $125,000

Bill Singer's
Comment: WOW!!! A truly impressive conglomeration of Don'ts. I would
certainly put this one in a Regulatory Casebook in order to train all
budding compliance folks. I'm just puzzled as to why no individual
was named? Wasn't any human being responsible for any of these
shortcomings?

Taglich
Brothers, Inc.
AWC/#ELI2005004501/June 2007

The Firm failed to enforce its written supervisory procedures
requiring annual reviews of its fee-based
retail customer brokerage accounts to review the appropriateness
of the compensation structure
for each customer and documentation of the reasons customers choose a
fee-based account.

The Firm failed to implement an adequate supervisory system and
written procedures designed to ensure that all electronic
communications relating to its business as a broker-dealer are captured
and retained. The firmís supervisory system failed to provide
for effective follow-up and review or other monitoring of instant
message (IM) usage at the firm to ensure that all IM users had properly
synchronized their network login passwords and that all
electronic communications were being retained. The Firm failed to
maintain and retain all business-related IM communications its
registered representatives sent and received.

Bill Singer's
Comment: Another in a growing number of IM cases. This looks like a
regulatory growth area.

New
York Global Securities, Inc.
AWC/#E1020050319-01/June 2007

The Firm prepared and issued research reports to public customers
that violated NASD rules governing the content and disclosures required
for equity research reports and rules governing content standards for
communications with the public. The reports failed to disclose the
firmís actual, material conflicts of
interest, the percentage of all
securities rated by the firm to which is would assign a ďbuy,Ē
ďhold/neutralĒ or ďsellĒ rating, the risks that may impede the
achievement of cited price targets. The firm also failed to provide
clear and comprehensive disclosures, used appropriately conditional
and/or indefinite language in disclosures, and failed to provide readers
with a sound basis from which to evaluate a potential investment.

New York Global Securities, Inc: Censured: Fined $45,000; Suspended
from issuing any research reports for six months.

Bill Singer's
Comment: Assuming that the Firm failed to abide by the disclosure
standards, I have no quibble with the sanctions. However, when will
we see a wirehouse suspended from issuing research reports for days and
weeks (much less months)?

Coker
& Palmer
AWC/#2006003761701/June 2007

The Firm issued research
reports that (i) did not contain any disclosures concerning the
risks that might impede achievement of a price
target; (ii) contained price target-risk disclosures, but such
disclosures were not presented in the required form; and/or (iii) failed
to disclose the percentage of
all securities the firm rated to which it had assigned a buy, hold or
sell rating, and the percentage of companies within each category
for which the firm had provided investment banking services within the
preceding twelve-month period.

Signer sent and received electronic correspondence related to the
firmís securities business using
his own email provider and failed to copy the firm on all email
communications as required by the firmís procedures. The Firm failed
to retain and preserve all of Signerís business-related email and to
preserve all of it in a non-erasable and non-rewritable format. The
Firm's supervisory systems and procedures were not reasonably designed
to achieve compliance with SEC Rule 17a-4 since they did not adequately
provide for capturing, retaining and preserving Signerís business
related emails when he failed to copy or forward them to the firm.
Finally, the Firm failed to conduct an annual inspection of Signerís
branch office pursuant to NASD Rule 3010(c) and its own written
procedures.

Bathgate Capital Partners LLC: Censured; Fined $50,000

Steven Charles Signer (Principal): Censured: Fined $15,000

Bill Singer's
Comment: I'm just a tad puzzled by the sanctioning logic here --- which
may well be valid but the NASD might have spent a bit more time clarifying
what seems to be an inconsistency. If Signer used his "own
email provider" and "failed to copy the firm" AS
REQUIRED BY THE FIRM'S PROCEDURES, then why is the firm being charged with
failing to retain his communications? Isn't the firm a victim here
of Signer's deceit or, at best, his misunderstanding of the email
policy? Something here just doesn't make sense.

The Firm failed to timely
report municipal securities transactions to the MSRB. In
contravention of NASD Rule
2711(g)(3) trading restrictions in a ďresearch analyst account,ď
Brown effected securities transactions in accounts he owned, each of
which involved securities issued
by a company he followed as a research analyst (moreover, the
transactions were inconsistent with his recommendations as reflected in
his most recent research report his member firm published). The Firm and
Brown issued research reports that did not include either price
charts and price target disclosures or information required by
Rule 2711(h)(6) and (7), or information directing readers in a clear
manner where they could obtain applicable current disclosures in written
or electronic format, and issued one firm research report that failed to
include price charts and price target disclosures. The Firm failed to
establish, maintain and enforce written supervisory procedures
reasonably designed to achieve compliance with its trade reporting
obligations and failed, in certain respects, to implement and adequately
enforce its written supervisory procedures relating to NASD Rule
2711(h).

Bill Singer's
Comment: I've noticed a recent increase in research action. As I noted
several months ago, I believe that NASD will be focusing on trading done
by analysts, and this case underscores that contention. Pointedly,
Compliance Depts must be very careful to scrutinize not only all trading
by an analyst on covered companies (by now you would think that would be a
given) BUT -- even more important -- you MUST flag any trading activity
that is inconsistent with published recommendations. As critical as
I am of so-called "red flags," there is no question in my mind
that an analyst trading contra to a firm's published recommendation is a
clear warning sign of potential trouble.

Donner
Corporation International nka National Capital Securities, Inc., Jeffrey
Lyle Baclet (Principal), Paul Alan Runyon
#CAF20020048/June 2007 The United States Securities and Exchange
Commission imposed sanctions on appeal of a National Adjudicatory
Council Decision that imposed sanction following appeal from Office of
Hearing Officers Decision

Acting through Baclet, the Firm issued research
reports on companies whose stock traded below $5 per share that failed
to disclose material information and contained misleading, exaggerated
and false statements. The Firm and Baclet failed to disclose that
the firm had received
compensation for the preparation and issuance of research reports
on the issuersí behalf. Through Baclet, the Firm failed
to obtain signed approval of research reports prior to their
dissemination. The Firm and Baclet failed to establish, maintain and
enforce adequate written supervisory procedures reasonably designed to
achieve compliance with applicable securities laws and NASD rules
concerning the preparation and issuance of research reports. Runyon
issued research reports that contained material misstatements and
omissions.

Paul Alan Runyon: Fined $20,000; Suspended 6 months in all
capacities; Required to requalify as General Securities Representative
and Principal

Bill Singer's
Comment: The SEC Opinion states that

Under
a typical agreement between Donner and an issuer, Donner received an
initial retainer fee of $2,500, $2,000 per month for services provided,
and $2 to $3 for each investor package mailed to potential investors.
Some agreements also provided that Donner would receive stock if the
company's share price exceeded a certain level after Donner initiated
coverage of the company. Uberti testified that, for the companies Baclet
gave him "to handle," Uberti received fifty percent of the
amounts "generated by [Donner's] relationship with the
company."

If
you are unfamiliar with these "touting" cases, you might want to
visit http://sec.gov/litigation/opinions/2007/34-55313.pdf
and read the details of these types of arrangements. The statement
of facts is quite well crafted and offers some fascinating insight.

engaged in proprietary
trades that required a higher minimum net capital and failed to
file the required application, and receive NASD approval, to change
the membership agreement
under SEC Rule 15c3-1 before engaging in the proprietary trades.

Valdejueza deposited cash in varying amounts to his personal bank
account at an automated teller machine (ATM) and each time falsely
represented the amount of the deposit by adding zeros to the
deposit amount when entering it on the ATM keypad. Valdejueza
intentionally entered the false deposit amounts knowing that the bank
would credit them to his account and that he would have access to funds to
which he was not entitled until the bank reconciled the false
entries.

Neilson Ojastro Valdejueza: Barred

Maria Teresa Taussi
#2005002322601/May 2007

Taussi converted $80,000 from her member firm for her own use and
benefit by cashing checks that were issued to ďCashĒ and falsely
recording that these checks had been paid to vendors. Taussi failed
to respond to NASD requests for information and documents.

Maria Teresa Taussi : Barred

Lonnie Richard Shupak
AWC/#2006006141401/May 2007

Shupak opened several money market accounts for public customers of a
bank affiliated with his member firm, accessed the bankís electronic
records system and changed a code
in the records to show that the money market accounts had been opened as
checking accounts, for which he entitled to receive more
compensation from the bank for opening a checking rather than a money
market account.

Lonnie Richard Shupak : Barred

Kenneth Christopher Shelley
#C3A20050003/ May 2007

Shelley attempted to cheat on
the Series 24 examination and failed to comply with NASD Rules of
Conduct governing securities examinations.

Kenneth Christopher Shelley: Barred

Bill Singer's
Comment: Truly, you must read this case to believe it. Among the
more bizarre facts is that Shelley's former joint-producer (who is
referred to as CA in the decisions) had gotten into a physical altercation
with Shelly that sent them both to the hospital and ended their business
relationship. CA apparently tipped off NASD that Shelly had
previously bragged about cheating on his registration exams -- hiding
notes in the bathroom, bringing in notes to the exam room, downloading
notes onto a hand-held device, etc. There is also the odd issue as to how
CA knew about Shelly's exam date. That info is not publicly
available and there was a intimation that CA had illegally or improperly
obtained the information by using Shelly's social security number.
Also, a proctor found Shelley's Series 24 examination manual
"hidden" behind the garbage can in the testing center bathroom
-- Shelley apparently suggested that CA had arranged to place it there.

William Frederick Ross (Principal)
OS/#2005000094001/May 2007

Ross failed to

establish, maintain and enforce written
procedures reasonably designed to supervise his member firmís
wholesale trading and market
making business and its registered representativesí actions;

establish and maintain an adequate supervisory system reasonably
designed to achieve compliance with federal securities laws,
regulations and NASD rules to adequately supervise the trading and
market making activity the firm conducted;

adequately review a
representativeís trading activities and ignored or failed to
identify red flags associated with the representativeís
manipulative trading;

provide adequate AML
training for appropriate personnel and failed to provide for
independent testing for AML compliance by member personnel or a
qualified outside party; and

monitor and analyze manipulative trading, he did not further
investigate suspicious activity to determine if he should file an
SAR to report suspicious transactions.

William Frederick Ross : Fined $50,000; Suspended 1 year in principal
capacity; Required to complete 25 hours of AML conntinuing education
within 12 months of becoming associated with any NASD member firm.

Offenbacher knowingly and intentionally, artificially
increased the market price of a stock in an attempt to comply with
the provisions of SEC Rule 10b-18 and still execute a cross transaction
between the issuer and the seller at the negotiated price.

Klaus Alois Robert Offenbacher : Fined $25,000; Suspended 90 days in
all capacities (credit to be given
for 60-day suspension imposed by member firm without pay).

Bill Singer's
Comment: Rule 10b-18 provides a voluntary "safe harbor" from
liability for manipulation when an issuer or its affiliated purchaser bids
for or purchases shares of the issuer's common stock in accordance with
the Rule 10b-18's manner, timing, price, and volume conditions. Rule
10b-18's safe harbor conditions are designed to minimize the market impact
of an issuer's repurchases, thereby allowing the market to establish a
security's price based on independent market forces without undue
influence by the issuer.

Kelly Irene OíBrien
AWC/#2006007054301/May 2007

O'Brien submitted expense
reports to her member firm in which she had forged her supervisorís
name.

Kelly Irene OíBrien : Barred

Penny Dorton Montalvo
AWC/#2006004558801/May 2007

Montalvo made improper use of public customersí funds in that she notarized
what was purported to be the customersí signatures on a Letter of
Authorization (LOA) requesting a $1,000 wire transfer from the
customersí account to a bank account in the name of Montalvoís family
member, without the customersí authorization. Montalvo failed to appear
for an NASD on-the-record interview.

Penny Dorton Montalvo: Barred

Vikram S. Manhas
#20050027081-01/May 2007

Manhas had a public customer
unknowingly sign documents to open a securities account at another
broker-dealer,transferred
$240,000 from the customerís old account to the new account and
submitted false documents to the new broker-dealer to transfer the
customerís assets to Manhasí personal account. Manhas sold the assets
and withdrew the proceeds from his account, thereby converting
the customerís funds to his own use and benefit. Manhas submitted
falsified documents to a member firm in furtherance of his scheme to
convert the customerís assets. Manhas failed to respond to NASD requests
for information and failed to appear for an NASD on-the-record
interview.

Lane borrowed $5,000 from a
public customer in contravention of his member firmís written
procedures that prohibit employees from borrowing or otherwise obtaining
any customer funds for personal use or investment. Lane failed to respond
to NASD requests for information.

Timothy John Lane : Barred

John Christian Krudop
AWC/#20050034677-01/May 2007

Krudop placed large on-open
orders through the NASDAQ Opening Cross through SuperMontage to create a
buy or sell imbalance that would exert pressure on the securityís
share price, then he placed
transactions through an Electronic Communications Network (ECN) on the
opposite side of the imbalance he had created to obtain an
advantageous price that would not have been available but for his entry of
a large on-open order. Upon receiving execution of his order(s), Krudop
would cancel the subject orders prior to the time after which such orders
could not be canceled.

Bill Singer's
Comment: We haven't seen as many of these so-called National Best
Buy/Offer (NBBO)-type cases as we did during the past few years.
Nonetheless, this type of market manipulation still occurs and it good to
see the NASD policing the markets to ensure consistency among
quotes. However, I still wonder why this just isn't a form of
"gaming" the system. This case is interesting because it
shows the vulnerabilities of SuperMontage. First, any number of
orders can be submitted that create an order imbalance -- as we see here,
the entry can be done not for the legitimate purpose of seeking a
"fill" for the entered order, but solely to
"manipulate" the contra-side of the equation. The order
can then by used to short-circuit SuperMontage by entering an offsetting
order through an ECN that elicits a fill on far better terms than a
legitimate market would have permitted.

When all is
said and done, you still have to wonder. Why is it so easy to short
circuit the market? Clearly, there are other -- far more
sophisticated maneuvers -- even supposedly legitimate ones, that permit
market makers and market participants to "move" a stock one way
or the other on any given day. Bidders routinely seek to hide the
size of their bids and firms seek to hide the "principal" client
by breaking up orders. Why are those gambits more savory?
Seriously, when all is said and done, Krudop entered orders that could
have been "hit" and he could have suffered some market
risk. Moreover, as even NASD admits, he cancelled the orders within
the legal time for such cancellation. So his violation was that he
entered at-risk orders in a manner calculated to game the system and
which, in fact, permitted him to get better fills through the contra ECN
orders. Please understand, I am NOT defending the conduct and
appreciate the violation --- however, there are always consequences when
regulators prohibit some aspects of gaming the system but tolerate
others. Just a thought piece.

John David Kaweske (Principal)
#C0720040042/May 2007 National Adjudicatory Council imposed sanction
following appeal from Office of Hearing Officers Decision.

Kaweske failed to promptly return investor funds after an offering
closed without meeting its sales contingency, and failed
to establish an escrow account for the contingency offering. He
made fraudulent misrepresentations in connection with the purchase and
sale of preferred stock. Also, Kaweske willfully failed to disclose
material information on his Form
U4.

Hirth willfully failed to disclose material information on his Form U4.
Hirth functioned as a member firmís associated person and engaged in a
securities business even though he was statutorily
disqualified. Also, he failed to respond to an NASD request for
information and documents.

Gary Evert Hirth: Barred

Brian Stuart Hirsch
AWC/#2005002601001/May 2007

At the request of institutional public customers, he provided them with
letters that contained false and misleading representations to the effect
that each of the institutions maintained the required collateral to issue
credit facilities in the amount of $130 million. Hirsch
failed to verify deposit of funds prior to sending the letters, knowing
that the institutions planned to use the letters to secure funds for
investment in venture capital projects, and he knew that the
institutions had no funds or securities in their accounts at his member
firm. Hirsch neglected to obtain prior
approval of the correspondence from a principal at his firm when he
knew, or should have known, that prior approval of outgoing correspondence
was required pursuant to firm procedures.

Brian Stuart Hirsch: Fined $10,000; Suspended 18 months in all
capacities; Ordered to requalify by exam as a general securities
representative (Series 7) within 90 days of becoming re-associated with
any NASD member in any capacity. If Hirsch fails to requalify within 90
days, he will be automatically suspended from association with any NASD
member in any capacity until he requalifies.

Bill Singer's
Comment: An interesting case in that it provides insight into the
shady-doings by institutions when it comes to raising funding for
deals. One wonders whether there is a more far-reaching criminal
inquiry now ongoing. Clearly, Hirsch is not the only bad guy here.
What about the institutions that solicited the fraudulent
letterhead? What about the deals that were put together (or
attempted) with funding secured through knowing fraud? Why doesn't
the NASD disclose the names of the institutions?

As a representative of a bank affiliated with his member firm, Gomez provided
false information to a mortgage company in that he substantially overstated
the amount of funds a bank customer had in his checking account and
misrepresented the date on which the account was opened. Gomez
submitted the falsified document to the mortgage company for
processing.

Bender received $1,000 from a
public customer as a reward for the gains the customer realized in
his brokerage account in violation of NASD Rule 2330(f), which prohibits
registered representatives from sharing directly or indirectly in the
profits in any customer account.

Mark William Bender: Fined $5,000; Suspended 10 business days in all
capacities.

Bill Singer's
Comment: Hmm. . .lemme see if I have this one correct. You get fined
$5,000 for accepting $1,000 from a public customer after you made profits
in his or her account. Okay, got that. On the other hand, NASD recently
offered some $35,000 to all of its members if the membership approved the
merger with NYSE. And the big difference is what? Oh, yeah, I
see. The RR made a profit for the customer. Hey, what???
You expected me not to take one of my famous patented, sarcastic shots?

While employed at a bank affiliated with his member firm and in
connection with a mortgage application, Basile falsified a copy of a
public customerís canceled check by changing the date
and number on the check to make it appear that it was the missing
check needed to prove that the
customer had been making regular payments on an existing credit
account, and submitted it and other check copies to the retail credit
sales department in order to process the loan application.

Bill Singer's
Comment: And they say there's no more customer service? Geez -- I
wonder if Basile also gave the guy a free toaster (alas, I'm dating
myself...they don't give free toasters anymore when you open a bank
account. Now, if only I could convince them to give out free iPODs!!)
See the Gomez case for similar facts.

W.R. Hambrecht + Co., LLC
AWC/#E0120050083-02/May 2007

The Firm underwrote an offering
of common stock on a firm commitment basis and in an effort to meet
a perceived regulatory minimum deal size, it submitted
a bid to purchase 200,000 shares that had not been bid for in the auction
without identifying itself as the bidder. The Fiirm allocated
shares for which it did not have orders to its market-making account and
sold the shares the next day in the after-market at prevailing prices,
thereby receiving $77,239 in
profits. The preliminary prospectus did not disclose that the firm
would or could submit a bid that indicated its intent to purchase shares
in the auction, and the final prospectus did not disclose that the firm
had sold the shares at prevailing market prices and realized a profit on
the transactions.

The Firm engaged in conduct inconsistent with just and equitable
principles of trade by submitting a bid in the live-auction and purchasing
shares offered in the auction in a proprietary capacity without
disclosure. Further, the profit realized on the proprietary transactions
constituted underwriting compensation that the firm failed to
disclose.

Bill Singer's
Comment: Another tortured explanation from the NASD -- "an effort to
meet a perceived regulatory minimum deal size..." Truly, I have
no idea what the NASD means by that and, frankly, doubt that the writer of
the disciplinary report does either. Is the SRO suggesting that this
was a mini-max and the mini failed? Is the SRO suggesting that the
Firm thought it was obligated to sell a specific minimum number of shares
to the public and panicked when it came up short?

As far as this
case goes (and to the extent I understand what happened), it's actually
quite interesting. The Firm underwrote on a Firm Commitment basis
but apparently came up short on the placement of about 200,000
shares. The Firm then bid for its own undistributed shares (???) but
did not disclose its identity. Lacking sufficient indications of
interest for the 200,000 shares, the Firm simply dumped the shares in its
market-making account and then sold them in the after-market at prevailing
prices to the public. What NASD seems to have been troubled by (and
rightly so ... if only they made the point), is that this didn't exactly
come off as a bona fide public offering and for all intents and purposes,
the Firm interposed itself within the offering and made a profit that
should have gone to a public buyer. Under the totality of
circumstances, the sanctions seem a tad light.

The Firm permitted a statutorily
disqualified person to function as an associated person. The Firm
failed to obtain fingerprints from that individual and submit them for
identification and processing as SEC Rule 17f-2 required and failed to
discover that the individual had previously
been convicted of a felony.

The Firm accepted and executed unsolicited customer orders to purchase
and sell options, and failed to timely submit an application for NASD
approval of this material change
in business. The Firmís written supervisory procedures were not
reasonably designed to achieve compliance with rules applicable to its
options business.

The Respondents were aware, or should reasonably have been aware, of
ďred flagsĒ that should
have triggered the firmís AML
obligations.

Acting through Rumyantsev and Santos,the Firm

failed to adequately implement and enforce AML procedures,

failed to adequately perform due diligence, file Suspicious Activity
Reports (SARs) or cease trading in multiple accounts a public customer
of the firm owned and controlled.

Acting through Santos, the Firm

participated in private
placement distributions of securities for which the memoranda
represented that the offerings were on a best
efforts ďpart or noneĒ basis, and failed to properly escrow
purchasersí funds in a segregated account until the minimum
contingency had been satisfied. The Firm caused the release of
funds before satisfaction of the contingency to sell the minimum
amount of securities through bona fide transactions to non-affiliated
investors, thereby rendering there presentations in the memoranda
false and misleading;

failed to timely report
written customer complaints to NASD;

failed to timely report the existence of conditions that required
disclosure within 10 business days after the firm knew, or should have
known, of the existence of the conditions.

Santos failed to ensure that the firm establish and maintain an
effective supervisory system, including adequate written procedures,
reasonably designed to achieve compliance with federal securities laws,
regulations and NASD rules relating to contingency offerings and reporting
requirements.

Nevwest Securities Corporation: Censured: Fined $100,000 ($100,000 jt/sev
with Santos; $75,000 jt/sev with Rumyanstev); Required to hire an
independent consultant to review the firmís policies, controls, systems,
procedures and training relating to the firmís ability to comply with
the Bank Secrecy Act, NASD Rule 3011 and other anti-money laundering (AML)
statutes and regulations, and all rules and regulations related to its
participation in private offerings; Ordered
not to a) participate in any private offering for 30 days following the
effective settlement date, and b) accept or hold customer securities until
it certifies to NASD that it has adopted and implemented recommendations
the consultant made in the initial written report.

Sergey Rumyantsev (Principal): Censured; $75,000 jt/sev with Firm;
Suspended 3 months in Principal capacity; Required to complete 16 hours of
AML training each year for a two-year period (16 hours within six months
after the settlementís effective date)

Antony Michel Santos (Principal): Censured; $100,000 jt/sev with Firm;
Suspended 3 months in Principal capacity; Required to complete 16 hours of
AML training each year for a two-year period (16 hours within six months
after the settlementís effective date)

Bill Singer's
Comment: Once again we see that NASD is focusing on so-called "red
flag" issues. Also, note that the escrow issues that started to
pop up in 2006 are continuing in 2007. Finally, note the very severe
sanction that prohibits private offerings for 30 days and the suspension
of the right to accept/hold securities until the adoption/implementation
of the consultant's written report. A very creative sanction.
Now let's see if such creativity is applied even-handedly to larger
firms. See the Prudential case for another
red-flag case.

failed to establish and maintain a supervisory system, and failed to
establish, maintain and enforce written supervisory procedures
reasonably designed to provide a system of supervision
for registered representatives with disciplinary histories of repeated
customer complaints, disciplinary actions and/or arbitrations;

failed to establish and maintain a supervisory system, and failed to
establish, maintain and enforce written supervisory procedures
reasonably designed to prevent and detect unauthorized
trading;

failed to enforce the firmís written procedures relating to telecommunications;
and

permitted a registered representative to solicit an individual by
telephone after the individual had requested to be placed on the firmís
ďdo not callĒ list.

commenced a private
placement offering and participated in municipal securities
transactions contrary to its NASD membership agreement, and did
not file an application for approval to engage in new lines of
business, including private placement offerings and municipal
securities transactions, even though these were material changes in
the firmís business operations;

failed to adopt, maintain and enforce an adequate supervisory system
regarding private placement transactions and the maintenance of
internal communications.

Acting through an unnamed individual, the Firm conducted a securities
business without maintaining its required minimum
net capital. Finally, Amerifinancial failed to timely create and
implement its business continuity plan.

Bill Singer's
Comment: As noted in earlier months, NASD appears to have a regulatory
initiative oriented towards Membership Agreements and firms' failure to
confine their business lines to the restrictions stated therein. See
the Membership Issues box at the top of this page.

FDC permitted certain new
employees hired by the investment advisor FMR Co. to ďparkĒ NASD
licenses they held prior to joining Fidelityóeven though they did
not perform any functions for the broker-dealer. The four Fidelity
broker-dealers improperly
maintained registrations for 1,100 individuals who did not perform jobs
for which an NASD license is required or permitted. By parking and/or
improperly maintaining those licenses, the Fidelity broker-dealers
effectively gave those individuals the ability to rejoin a brokerage firm
at a later time without the re-testing required of those who are
unregistered for two or more years. NASD alleges that its qualification
and registration requirements are intended to afford reasonable assurance
to the investing public that registered individuals maintain and update
their knowledge about products and services available to investors, as
well as applicable rules, regulations, and policies governing the
investment banking and securities business.

In addition, the four broker-dealers failed
to assign registered supervisors to 1,000 registered individuals.
None of the broker-dealers had any mechanism, policy or procedure in place
in place to ensure that registered individuals to whom no registered
supervisor was assigned complied with NASD rules. NASD opines that these
violations occurred because the Fidelity BDs permitted employees from
every aspect of the Fidelity-wide enterprise to maintain registrations if
they chose to do so, and they did not assess on an individual basis
whether the activities of each individual fell within the ďpermittedĒ
or ďrequiredĒ categories for NASD registration.

From 2002 through 2004, at least nine of the FMR Co. investment advisor
traders whose licenses were parked at FDC received gifts
and entertainment valued at hundreds of thousands of dollars from
employees of brokerage firms who sought business from FMR Co.
During that time, FDCís gift policy and Fidelityís corporate-wide gift
policy prohibited employees from giving or receiving gifts with a value of
more than $100 per calendar year from a current or prospective customer.
Likewise, Fidelityís entertainment policy prohibited employees from
giving or accepting transportation (other than local ground
transportation), lodging or other travel-related expenses to attend an
entertainment event with customers without reimbursement from or to the
customer for the expense. Fidelity also maintained a general policy
governing professional conduct and conflicts of interest which provided
that ďFidelity expects employees to have high standards of performance,
integrity, productivity and professionalism.Ē This general policy also
required employees to be familiar with and adhere to the more particular
standards set forth in Fidelityís gift and entertainment policies. FDC
failed to take any action to identify or examine the nature, frequency,
extent and expense of the gifts and entertainment received by the
investment advisor traders to determine if the gifts and entertainment
were in compliance with Fidelityís policies.

Examples of gifts provided by brokerage firm employees to the
investment advisor traders included: several private chartered flights,
including flights provided to an NASD-registered Fidelity trader and his
wife for their honeymoon, tickets and lodging at expensive hotels for
Wimbledon tennis tournaments, tickets to a Justin Timberlake/Christina
Aguilera concert, tickets to the US Open Tennis Tournament, and twenty
bottles of expensive wine, including twelve bottles of 1993 Chateau
Petrus (Pomerol). Examples of entertainment provided by brokerage firm
employees to the investment advisor traders included: private chartered
flights to various destinations including, but not limited to, Palm
Beach and Miami Beach, FL, and Nantucket, MA, for overnight and weekend
golf outings, a bachelor party for one of the registered investment
advisor traders, and tickets to the 2004 Super Bowl. The golf outings
included annual, multiple-day golf trips at venues such as Las Vegas,
NV, Cabo San Lucas, Mexico, and Arizona. These events included
extravagant private accommodations for the investment advisor
traders.

From 2001 through 2004, the Fidelity broker-dealers failed
to retain email related to their business as such as required by
NASD rules and federal securities laws. Pursuant to a written, corporate
wide policy applicable to each broker-dealer, the Fidelity broker-dealers
retained email of only certain registered individuals and failed to keep
email of 1,900 other registered individualsótotaling approximately 18
percent of all registered individuals at the time. This
group consisted of NASD-registered individuals whom the firms determined
were not doing the work of the broker-dealer. NASD requested that
the Fidelity broker-dealers produce email for the investment advisor
traders. The Fidelity broker-dealers, however, could not ensure that they
had produced all email that should have been retained for these
individuals and that they had fully complied with NASDís regulatory
requests. In addition, prior to December 2002, the Fidelity BDs
recorded over back-up tapes and, from 2001 to August 2003, failed
to capture and preserve all Instant Messages and Bloomberg email.

Varley made false entries into his member firmís
internal customer relationship system that reflected he had had
several contacts with a client regarding the clientís preceding purchase
of mutual funds through an external wholesaler when, in fact, those
contacts had not occurred. Based on the purported contacts, Varley would
have been entitled to receive compensation in connection with the purchase
if the firm had not discovered that the entries were false.

Daniel J. Varley: Barred

Bill Singer's
Comment: I seem to be scratching my head a lot more in April in an effort
to understand what NASD means. As best I can discern, this RR
falsely stated that he had had several contacts with clients before they
purchased mutual funds, when in fact he didn't have
"several." Okay, so does that mean he had only one or a
few but not several? Is the NASD saying that Varley's firm paid him
fees on those sales solely based upon his false representation of
"several" contacts even though the order was entered through him
-- or the order wasn't entered through him -- or the order was but he only
had one prior contact and that didn't entitle him to payment. If
you're going to bar someone, you think that maybe, just maybe, you could
explain what the underlying conduct was that deserved such a severe
sanction?

Meyers and Klein engaged in fraud by recklessly failing to disclose to
public customers potential sales
incentives for selling a particular recommended stock. The
sanctions were also based on the hearing panelís findings that Meyers
and Klein made fraudulent price
predictions for the stock in order to induce customers to purchase
it.

Acting through Lee, his member firm failed
to record private placement transactions on its books and records.
A company, acting through Lee, entered into a written agreement
with an unregistered individual and retained him as an independent
contractor to offer and sell its securities, and Lee caused the company to
pay commissions to the individual, thus dealing with him on terms and
conditions different from those it accorded the general public. Lee
knew, or should have known, that the independent contractor effected
transactions in securities without registration as a broker or dealer in
violation of Section 15(a)(1) of the Securities Exchange Act of 1934. In
connection with his companyís offers and sales of securities, Lee caused
his company to make untrue statements of material fact and omitted to
state material facts necessary in order to make the statements that it
made, in light of the circumstances in which they were made, not
misleading.

Bill Singer's
Comment: Geez--could the NASD have made it any more difficult to
understand a disciplinary action? For starters, it's not exactly
clear as to the distinction between the "member firm" and
"a company." I'm going to assume the NASD meant that there
was an NASD Broker-Dealer/Employer of Lee and another non-BD entity
(perhaps the issuing company). Apparently the company paid
commission to an unregistered persons but it's not exactly clear why Lee
is responsible --- I mean, come on guys, "acting through Lee"
doesn't explain jack. So what if a company pays an independent
contractor commissions; how did that become Lee's regulatory
problem? I'm not saying the facts don't support a violation.
I'm saying that it would have helped if someone at NASD bothered to add a
few more explanatory sentences here.

Acting through Huberman, his firm failed to establish and maintain a supervisory
system, including but not limited to, the establishment and
maintenance of written procedures reasonably designed to ensure that the
firm and its associated persons complied with NASDís Research
Analyst and Research Report Rule. Huberman failed to ensure the
timely filing of Forms U5.
Huberman continued to act in a registered capacity even though he became
inactive for failing to complete the Regulatory
Element of Continuing Education.

Greenjack falsified an annuity liquidation form in that he took a form
a public customer signed and submitted in connection with an earlier
withdrawal, altered the withdrawalís
date and dollar amount and then submitted the falsified annuity
liquidation form to the insurance company for processing. T

Gordon and Lee allowed a statutorily
disqualified individual to function as the firmís principal
without his properly being registered and failed to disclose the
individualís association with the firm on a Uniform Application for
Broker-Dealer Registration (Form BD). They caused their firm to charge
retail customers fraudulently excessive
markups and failed to
disclose the markups on customer confirmations.

This decision has been appealed to the SEC. The SEC denied Gordonís
request for a stay of the bar. The sanctions, other than the bars, are not
in effect pending consideration of the appeal.

Fleno aided and abetted
a registered representative in his fraudulent and manipulative parking
scheme by participating in the non-bona fide sale and purchase of municipal
bonds. Fleno purchased bonds into his member firmís proprietary
account to hold the bonds for several days so the registered
representative could purchase them back within several days.

DeSaint falsified documents regarding the price of convertible bonds in
an effort to hide the excess market risk created by his losses
accumulated from selling 10-year Treasury Note futures. By
falsifying documents, DeSaint caused his member firm to fail to preserve
accurate books and records in compliance with SEC Rule 17a-4. DeSaint
failed to respond to NASD requests for information.

Philippe Alfred DeSaint: Barred

Richard Joseph Alderman Jr.
AWC/#2006005141601/April 2007

Alderman failed to provide any notice to his member firm of his outside
employment with another member firm. The findings stated that
Alderman also failed to disclose his continuing employment with his member
firm to the new firm. The findings also stated that Alderman failed
to appear for an NASD on-the-record testimony.

The Firm allowed registered individuals to maintain their registrations
as general securities representatives while they were not
actively involved in the firmís investment banking or securities
business, and were not functioning as the firmís representatives.
The Firm failed to establish, maintain, and enforce a system of
supervisory control and policies, and procedures reasonably designed to
achieve compliance with NASD rules to prevent the firm from maintaining
the registration of any registered representative not actively involved in
the firmís investment banking or securities business, and not
functioning as a representative of the firm.

The Firm violated NASD Conduct Rule
2830: Investment Company Securities by maintaining programs
in which participating mutual fund companies and other financial services companies
paid fees and, in return, received preferential treatment from the
firm, including exclusive listings on the firmís internal Web site, the
use of ďblastĒ emails to the firmís representatives, participation
in conference calls and speaking arrangements at various firm meetings.
The mutual fund companies paid for their fees by directing
a minimum of $90,790 in brokerage commissions to the firm. The Firm
violated NASDís recordkeeping requirements by failing to make and keep
adequate records concerning the compensation received from offerors who
participated in the shelf space programs.

The Firm failed to include conflict
of interest disclosures in research reports as NASD Rule 2711(h)
requires.

Censured; Fined $10,000

Bill Singer's
Comment: Just one comment--given that this firm was located in New Orleans
and given the recent devastation of Hurricane Katrina, did the NASD so
desperately need that $10,000? You all couldn't let this one go with
just the Censure?

Acting through Aaron and Randall Wilbanks, the Firm failed
to specify a cycle for the inspection of non-branch locations in
its written supervisory procedures and to conduct
inspections of 55 non-branch locations as NASD Rule
3010 (c)(1)(C) requires. The Firm and Randall Wilbanks failed to
file quarterly reports with NASD that disclosed information regarding customer
complaints. The respondents failed to preserve its received and
sent electronic communications,
including inter-office memoranda and communications, in an easily
accessible place and to establish, maintain and enforce written
supervisory procedures regarding the preservation of electronic mail
correspondence.

Bill Singer's
Comment: Rule 3010 is the Supervision rule and, as such, a cornerstone of
each member and each supervior's compliance role. Note that you MUST
periodically inspect even a non-branch location (NBL) and that cycle of
inspection needs to be specified in your WSPs. Please note that
there is an annual compliance review of your business but there are
different reviews specified for branch inspections. Annually: OSJs
and Branches supervising NBLs. Every 3 years: Branches not
supervising NBLs. Periodic: NBLs. Given the importance of
subsection (c), let me cite a pertinent portion of that rule for your
consideration:

(c) Internal Inspections

(1) Each member shall conduct a
review, at least annually, of the businesses in which it engages,
which review shall be reasonably designed to assist in detecting and
preventing violations of, and achieving compliance with, applicable
securities laws and regulations, and with applicable NASD rules. Each
member shall review the activities of each office, which shall include
the periodic examination of
customer accounts to detect and prevent irregularities or
abuses.

(A) Each member shall inspect at
least annually every office of supervisory jurisdiction and any branch
office that supervises one or more non-branch locations.

(B) Each member shall inspect at least every
three years every branch office that does not supervise one or more
non-branch locations. In establishing how often to inspect each
non-supervisory branch office, the firm shall consider whether the
nature and complexity of the securities activities for which the
location is responsible, the volume of business done, and the number
of associated persons assigned to the location require the
non-supervisory branch office to be inspected more frequently than
every three years. If a member establishes a more frequent inspection
cycle, the member must ensure that at least every three years, the
inspection requirements enumerated in paragraph (c)(2) have been met.
The non-supervisory branch office examination cycle, an explanation of
the factors the member used in determining the frequency of the
examinations in the cycle, and the manner in which a member will
comply with paragraph (c)(2) if using more frequent inspections than
every three years shall be set forth in the memberís written
supervisory and inspection procedures.

(C) Each member shall inspect on a regular
periodic schedule every non-branch location. In establishing
such schedule, the firm shall consider the nature and complexity of
the securities activities for which the location is responsible and
the nature and extent of contact with customers. The schedule and an
explanation regarding how the member determined the frequency of the
examination schedule shall be set forth in the memberís written
supervisory and inspection procedures.

Each member shall retain
a written record of the dates upon which each review and inspection
is conducted.

Bill Singer's
Comment: "Membership Issues" appear to be making a modest
come-back in 2007. This is the third case this year I've reported in
which a member firm has apparently expanded the scope of its business or
undergone a material change of ownership without following the notice
procedures. If you haven't done so recently, please, review a copy
of your member firm's NASD Membership Agreement.

McElwee failed to timely file an application with NASD for approval of
a change in ownership of her
member firm. McElwee performed the duties of a Financial and
Operations Principal (FINOP) on
her member firmís behalf without being registered as a FINOP.

Bill Singer's
Comment: One of the classic "oops" types of violations. If
you are selling some/most/all of your firm, make sure to consider filing a
notice with NASD of the change of ownership. Sometimes you think
that it's the other guy's obligation, and that's often a costly
mistake. Also, don't act as a FINOP if you don't have that
registration. Okay?

While associated with his member firm, Martins engaged in activities
requiring registration while his registration
status with NASD was inactive due to his failure to complete the
Continuing Education Regulatory Element requirement.

offered and sold shares of common stock to public customers when
there was no registration
statement filed or in effect with the SEC with respect to the
common stocks as required by Section 5 of the Securities Act of 1933,
and the transactions were not exempt from registration requirements;

engaged in acts operating as a fraud or deceit in connection with
the purchase or sale of securities; and

misused public customersí funds intended to pay for their stock
purchases and solicited investors to purchase securities without the
benefit of a general
securities representative registration.

Masceri forged public customersí
signatures on insurance documents without the customersí
authorization or consent. Masceri responded untruthfully to NASD requests
for information.

Gregory Roy Masceri : Barred

Richard Horton III (Principal)
OS/# 2005003570601/March 2007

Horton improperly attempted to have his member firm reimburse
him for his personal expenses.

Richard Horton III : Barred

Bill Singer's
Comment: These bogus business expense cases were pretty hot during 2005
and 2006, but then started to cool off. Maybe my coverage warned off
a lot of folks?

Brown Jin Ho (Principa)
AWC/#20050035972-01/March 2007

Ho signed customersí names on account transfer forms without the
customersí knowledge or consent, and submitted them to his member firm
to effect the transfer of the
accounts from his previous firm to his new firm. After learning
that one of the customers had complained about the unauthorized transfer,
Ho contacted the customer several times to persuade
her to drop the complaint without advising his firm.

Brown Jin Ho: Fined $10,000; Suspended 4 months in all capacities

Bill Singer's
Comment: NASD must be getting soft. Only $10,000 and four months for
this. I would have expected at least six months. Perhaps there
were extenuating circumstances that the regulator didn't share with
us. As stated we have what looks like multiple forgeries and an
effort to engineer an undisclosed settlement--but, as I said, NASD may
have simply over-stated the case and the real facts are far less
compelling.

Robert Allen Frost
AWC/#20050013646-01/March 2007

Frost engaged in outside
business activities, for compensation, without providing prompt
written notice to his member firm. Frost maintained a desk in a local
bank, falsely told a public
customer that he was a salaried bank employee, and failed to
disclose that he was a registered representative with a firm and received
transaction-based commissions. Frost recommended a securities transaction
to a public customer without having a reasonable basis for believing the
transaction was suitable for the customer based upon her age, financial
objectives, situation and needs. Also, he failed to fully and timely
respond to NASD requests for information.

Robert Allen Frost : Barred

Bill Singer's
Comment: This is a very constructive case. Many folks that contact
me from the bank-side of things often have a tendency to blur the lines
between their bank activities and their registered securities activities
(and more than a few of the banks themselves seem to encourage just such
confusion--now there's one hell of a surprise). Sure, investors may
feel more comfortable knowing that the guy or gal sitting at the
"securities" desk isn't some cheesy stockbroker. Those
investors may even feel reassured that you're not on commission and are
salaried by some reputable bank (unless, of course, that bank is drowning
under a flood of subprime debt). But--guess what--if you're actually
a registered rep with that bank's NASD member firm, then that's what you
must disclose to the clients.

Byron D. Forsythe
AWC/#2006004236902/March 2007

Forsythe falsely represented to his member firm, in writing, that he
had taken and passed the Series 6
examination and failed the Series 63 examination when he had failed
to appear for both examinations. Forsythe failed to timely respond to NASD
requests for information.

Byron D. Forsythe: Barred

Bill Singer's
Comment: Maybe he just falsely represented to NASD that he appeared at
their offices to answer their questions?

Hong Joon Chun
#E1020041114-01/March 2007

Chun failed to appear for an NASD on-the-record interview. Chun sent a response
letter to a public customer without making the letter available to
his member firm for prior supervisory review and approval, thus preventing
the firm from discharging its obligation to review outgoing
correspondence.

Hong Joon Chun: Barred

Tom Chau
AWC/#20060050897-01/March 2007

Chau shared in a public
customerís trading loss by causing $40,000 to be deposited in the
customerís account. Chau did not obtain written authorization from the
customer or his member firm before making the deposit.

Tom Chau: Fined $5,000; Suspended 30 days in all capacities

Gerard Francis Byrne
#20050008469-01/March 2007

Byrne obtained a wrongful
extension of credit in violation of Section 7(f) of the Exchange
Act and Regulation X promulgated thereunder. Byrne failed to post trades
made in his personal margin account to the clearing firm, which caused his
member firmís books and records to be inaccurate.

fully comply with the Firm Element of NASDís Continuing Education
requirements for the years 2001 and 2002 by failing
to maintain records documenting the content of its continuing
education programs and completion of the programs by covered
registered persons;

develop an anti-money
laundering (AML) program reasonably designed to achieve and
monitor its compliance with the requirements of the Bank Secrecy Act
and the implementing regulations promulgated thereunder;

create or maintain a Business
Continuity Plan; and

maintain the minimum required net capital.

Vision Securities, Inc. : Censured; Fined $27,500

Bill Singer's
Comment: More often than not, you'll find me criticizing overly zealous
regulation by NASD. However, lately I've noticed a rise in what I
consider "silly" violations--those that reflect either laziness
by the member firm in reviewing and updating its own WSPs or an outright
failure to implement basic policies and procedures. In Vision
we see a firm that dropped the ball in a number of basic areas: CE, AML,
Business Continuity, and Net Capital. My advice to most firms is
that you might want to consider hiring an independent outside consultant
to conduct a confidential, annual review of your supervisory procedures
and to let you know --with fresh eyes-- what's missing and what's not
being done right. Speak to your outside law firm first about whether
that firm should hire the consultant for this purpose. On the other
hand (and here's where I even things out), gimme a break!!! You're
just now getting around to charging a firm with 2001 and 2002 CE
deficiencies? Not much point in fining anyone for five and six year
old violations. Maybe the NASD needs to be fined for its own
dilatory investigative policies.

The Firm failed to establish and maintain written supervisory
procedures that identified the
principal responsible for reviewing customer complaints,
disclosures and arbitrations. The Firm reported
customer complaints late and failed to amend Forms U4 and a Form U5 in a
timely manner. Acting through an individual, the Firm failed to
maintain a supervisory system reasonably designed to achieve compliance
with applicable rules and regulations, in that the individual
responsible for the direct supervision of the firmís equity trader was
not licensed as a Series 55 trading principal.

Bill Singer's
Comment: A literal reading of this case is that Summit failed to properly
identify supervisors in its customer complaint-disclosure-arb area; and
NOT that there wasn't someone handling these areas. On the other
hand, what a truly silly violation to be charged with, and, frankly, one
that falls squarely in the firm's lap. If you're going to have
someone do a supervisory job, at least make sure that your WSPs name that
person and identify the scope of his/her duties. Separately, NASD
seems on a hunt to confirm that supervisors of traders are registered
trading principals. Also see Shemano above for a similar
concern.

within 90 seconds after execution, to transmit last
sale reports of transactions in OTC equity securities through
ACT;

to designate some last sale reports as late through ACT;

to enforce its written supervisory procedures with respect to best
execution of customer orders as agent, ďriskless
principalĒ trade reporting, ACT reporting, short sale
reporting and recordkeeping;

to evidence (in documentation) that it conducted
the reviews described in its written supervisory procedures;

to provide written notification (when it acted as principal for its
own account) disclosing to its customers that

it was a market maker in each security,

its correct capacity in transactions, or

that transactions were executed at an average price.

failed to register a person
engaged in the firmís investment banking or securities business in
the registration category appropriate to the function to be
performed.

Also, the firmís supervisory system did not provide for supervision
reasonably designed to achieve compliance with applicable securities laws,
regulations and NASD rules concerning OATS and the ďThree Quote Rule.Ē

permitted an individual to engage in activities that required
registration as a General Securities Representative and General
Securities Principal when he was not registered as either;

began to clear its own transactions and, as a result, the firmís
supervisors no longer received consolidated
transactional data from its clearing firm; and

was unable to create a consolidated transaction log for supervisory
review and approval as its written supervisory procedures
required.

HSBC Brokerage (USA), Inc. : Censured; Fined $50,000

Bill Singer's
Comment: I'm seeing a number of my clients converting to self-clearing or
contemplating such a move. This case is a good reminder that with
such a dramatic change comes many new obligations. First off, you
are just not going to get the same supervisory reports from your clearing
firm. Make sure that you implement a comprehensive system of reports
to compensate for those you are losing.

The Firm permitted a representative to function in a registered
capacity while his registration
status was inactive due to his failure to complete the Regulatory
Element of the NASD Continuing Education requirement. The Firm failed to
enforce its written supervisory procedures pertaining to the Regulatory
Element of Continuing Education.

Headwaters MB, LLC: Censured: Fined $12,000

GunnAllen Financial, Inc.
OS/#2005002392101/March 2007

While acting through an individual, the Firm it failed
to obtain written consent to conduct numerous unauthorized Web-based
Central Registration Depository (CRD) searches and falsely certified that
the firm had obtained written consent. The Firm failed to

establish and maintain written procedures to supervise the use of
CRD;

supervise the use of Web CRD to ensure that the requisite written
consents were obtained prior to conducting all Web CRD searches;

ensure that all Web CRD searches were conducted for authorized
purposes.

GunnAllen Financial, Inc. : Censured; Fined $50,000

Bill Singer's
Comment: The unauthorized use of CRD seems to be an area of growing
concern for NASD. Worthwhile monitoring this issue. Two key
trends: 1. failure to document prior authorization to undertake a search;
and 2. searches not used for requisite business-related purpose.

Blain Anthony West
AWC/#2006005007801/February 2007

During an internal audit,
West was required to provide the file for a corporate customer and found
that the Corporate Authorization
to Open Account was missing a signature. In order to avoid a
problem with the bankís internal auditors, West made a copy
of the missing individualís signature from another document and
placed it on the Corporate Authorization without the individualís
knowledge or consent.

Smith falsified public customersí addresses to circumvent state
securities laws because he was not
licensed to sell securities in the state in which the customers
resided (these inaccurate customer account records caused his member firmís
books and records to be inaccurate). Smith used his personal
email account to communicate with the customers. Also, he
sent written communications to public customers that failed to provide a
sound basis for evaluating the presented information and contained
numerous false, exaggerated, unwarranted or misleading statements and
claims regarding investments.

Thomas Avery Smith: Fined $35,000; Suspended 2 years in all capacities;
Ordered to requalify by exam in all capacities

Alexis Jose Rivera (Principal)
AWC/#2005002440801/February 2007

Rivera engaged in a fraudulent trade allocation or ďcherry
pickingď scheme, in that certain of his member firmís
representatives aggregated retail customersí day trading orders and
communicated an opening transaction to Rivera, who would work
the order in a firm proprietary account to sometimes allocate a first
profitable trade to a relativeís personal account and the resulting loss
to the customersí accounts. Rivera failed to give the affected
customers best execution.

Alexis Jose Rivera : Barred

Robert Duane Ralston
AWC/#E8A2004108101/February 2007

Ralston made changes to insurance application forms a public customer
signed and affixed the customerís
initials to the changes with the customerís knowledge and consent
and submitted the forms to his member firm to purchase life insurance for
the customer, in contravention of
his firmís written supervisory procedures.

Robert Duane Ralston: Fined $5,000; Suspended 60 days in all capacities

James Anthony Parrelly (Principal)
OS/#E8A2003033801/February 2007

Parrelly recommended and effected transactions in Class B shares of
mutual funds for a public customer without having reasonable grounds for
believing the resultant transactions were suitable for the customer who
would have benefited from owning Class A shares in the identical funds.
Parrelly recommended the customer sell Class B shares and later
recommended that she purchase additional Class B shares of the same funds
so that she was subjected to
contingent deferred sales charges (CDSCs) as well as a new
CDSC period associated with the new purchases. Parelly engaged in short-term
trading of Class B shares within one year of the initial purchase,
thereby subjecting the customer to a 5
percent CDSC in connection with the sale. Parelly recommended that
the customer use cash distributions from mutual fund positions to purchase
additional shares of the same fund, generating
new commissionable sales instead of reinvesting the shares with the fund
group.

James Anthony Parrelly: Fined $5,000; Suspended 20 days in all
capacities; Ordered to pay customer the amount agreed upon pursuant to
their written agreement.

Bill Singer's
Comment: I pretty much stopped reporting these Class B actions because
they tend to simply regurgitate the same fact pattern. However, since
we've just started a new year and this one includes so many classic
elements, here it is--but you're not likely to see too many more on this
site for 2007. And while you're at it, read the Parker case
immediately below and tell me one thing: How come Parker got
suspended for 3 months and Parrelly on for 20 days? I mean, come on,
which case resulted in more harm to the public?

Lamont Percell Parker
AWC/#2005002097001/February 2007

Parker affixed public customersí
signatures to his member firmís proprietary forms to
replace lost original forms and placed them in the customersí
records as authentic.

Bill Singer's
Comment: Okay, so here's the deal: NASD acts correctly when it
charges folks for "forging" signatures (I use that term to
underscore how serious affixing someone else's signature is to any
document, even if the circumstances of any particular act do not amount to
illegal forgery). Few things scare investors more than finding their
names signed to something when they know they didn't do it. So,
folks, even if it seems harmless and you're doing it for all the right
reasons---stop!!! If you find yourself signing a client's name to
any document, don't do it. And if you are compelled by the customer
to sign their name (let's say they are in the hospital or out of the
country), please speak to your manager or compliance department before you
present your handiwork. All that having been said, a three-month
suspension for replacing lost forms seems a tad harsh. Hey, this is
my website. Show me where it says that I must be consistent.

Mongelli induced a public customer to purchase a security by promising
to place a stop loss order on the shares purchase, but failed
to place the promised stop loss order and, as a result, the client
suffered monetary losses. Mongelli transmitted
an electronic mail message to a prospective customer that contained
misleading statements that made unreasonable and baseless predictions
regarding potential return on the customerís future investments.

Bill Singer's
Comment: Stockbroker 101: If you promise to place a Stop/Loss order,
make sure you place the damn thing! If not, write out a check to
your client (but first notify your firm of your intent to make the refund
and get their permission). Stockbroker 101.version2: If you
send emails to prospects, to put your overblown predictions in
writing.

Toby Allen McKnight
#2005002806701/February 2007

"McKnight altered a Commission Override
Form after signing it to reflect that he would receive 20 percent of
future commissions rather than 10 percent, and he faxed the altered form
to his member firm. The findings stated that McKnight failed to respond to
NASD requests for information and failed to appear for an on-the-record
interview."

Toby Allen McKnight : Barred.

Bill Singer's
Comment: You think it's an easy job reading each and every NASD monthly
disciplinary report? Okay, how about you play along. Above is
an unaltered extract from the monthly report about RR McKnight. The
red lettered language in the quotes is taken verbatim from the official
NASD report. Okay, so---now you tell me. What the hell was
going on here. McKnight was supposed to get a 10 percent override
(on what? why?). For some reason, McKnight alters some form
and indicates an entitlement to a 20 percent override. Was McKnight
a manager supposed to okay these forms or was this RR simply hoping to
slip one by? How did McKnight get caught? Were there any
supervisory systems in place at the firm to detect whatever the fraud was
here? Was this simply a stupid, ill-conceived scheme to double one's
override by blatantly submitting a fraudulent form?

Now that you
are beginning to understand some of my frustration, ask yourself the most
basic of all questions: If McKnight's misconduct was so extreme as to
warrant a Bar, then why doesn't NASD do a better job of explaining what
the nature of the misconduct was and how firms might better deter and
detect future iterations. Frankly, this case sounds somewhat
intriguing and I wish our regulators appreciated the import of this
monthly disclosures as a teaching tool.

Caliope Makris
#2005001405001/February 2007

Makris affixed a public
customerís signature to a disability application without noting
that the application had been signed by someone other than the customer;
thereby violating her member firmís
prohibition against representatives signing documents on behalf of
customers, even with the customerís consent. Also, she failed to
respond to NASD requests for information.

Caliope Makris: Barred.

Bill Singer's
Comment: As I note every year--and for 2007 we start with my annual
admonition in only the second month-- even IF your customer gives you
consent to sign his or her name on a document, IF your firm has a policy
prohibiting RRs from signing on behalf of customers, that prohibition will
trump the authorization. Yes, yes, a thousand times yes, the
customer's authorization may well (and likely will) negate any allegation
of criminal forgery, but that's not the point. If you violate an
internal policy that may serve as the springboard for an NASD
violation. You say you're not sure I'm correct about that?
Okay, then just read this case. And then go argue with NASD!

While associated with a member firm, Cao maintained personal
brokerage accounts at other member firms without giving prompt
written notice to her member firm that she had accounts with those firms,
and without notifying those firms of her association with her member firm.
Kao participated in private securities transactions without giving prior
written notice to her member firm.

Angela Shuhui Kao : Fined $10,000; Suspended 40 business days in all
capacities

Guidicipietro engaged in a private
placement offering through means of an offering memorandum that was
false and misleading. The offering memorandum failed
to disclose that Guidicipietro would personally
receive substantial commission payouts for all effected
transactions and misrepresented the investment philosophy and trading
strategy to be employed in the account, as well as the attendant
risks.

In his capacity as operations
officer at his member firm, Germain converted
shareholdersí funds totaling $184,337.96 by having mutual fund
holdings liquidated and having the proceeds delivered to him by check or
wired to his bank account.

Clarke borrowed $38,000 from
public customers even though his member firmís written
supervisory procedures specifically prohibited registered representatives
from borrowing money from customers except immediate family members.
Clarke failed to respond to NASD requests for information.

Chicola effected unauthorized
trades in public customersí accounts. He failed to reasonably
supervise an individual to prevent and/or detect unauthorized trades.
Chicola settled a customer
complaint without his member firmís knowledge or consent.

Jeffrey Robert Chicola : Fined $10,000;Suspended 2 years in all
capacities

Charles Randall Cherry
AWC/#20060052299-01/February 2007

Cherry sent a letter to a variable annuity issuer requesting that the
issuer reallocate the subaccounts in the variable annuities of many
clients without his member firmís approval. He caused these changes to
be effected based upon oral
discretionary authority the clients gave him, although he had not obtained
the clientsí written discretionary authority, nor had he gotten
his member firm to accept the accounts as discretionary accounts.

Charles Randall Cherry: Fined $5,000; Suspended 10 business days in all
capacities

Bill Singer's
Comment: Yeah, I know...BUT...was the 10 business day suspension truly
necessary in this case? I fully appreciate that he apparently
circumvented his firm's approval (and I am not making light of that
factor); however, he did have "oral" discretion to make the
change and I'm not sure that anyone would confuse the discretion to
reallocate with the discretion to engage in ongoing trading.
Nonetheless, the NASD has made a sensible point --- don't circumvent your
firm's policies and procedures and unless it's "time and price"
discretion, you probably need prior written customer authorization to
exercise any other form of discretion.

Vicki L. Callaghan
AWC/February 2007/#2005003415301

Callaghan discovered that
errors had been made in calculating the required minimum distribution
for public customersí IRA accounts, and in order to rectify the errors, altered
and submitted disbursement request forms to her member firm without the
customersí knowledge, authorization or consent.

Brighton borrowed $14,800 from
public customers without his member firmís approval, and failed
to repay the loan by the agreed upon date, and failed to fully repay the
customer. In inducing and obtaining the loans, Brighton failed to disclose
to the customers that he had obtained loans from other customers in the
past and had not yet repaid those
customers in full.

published research reports that did
not disclose the valuation methods used to determine price
targets;

failed to preserve copies of
all electronic mail for three years and/or maintain electronic mail
for the first two years in an accessible location;

permitted an individual to engage in securities business without
being properly registered as a
principal;

participated in municipal underwritings while not
employing a qualified municipal securities principal;

permitted an individual to take customer securities orders, cause
orders to be executed and solicit transaction while
not registered as general securities representatives;

did not comply with the Regulatory
Element of the Continuing Education requirement and with the Firm
Element of the Continuing Education requirement;

provided inaccurate
information to NASD staff;

failed to make adequate inquiries and conduct sufficient due
diligence.

(acting through FINOPS) failed to establish and maintain ledgers and
other records that accurately reflected all assets, liabilities and
expense

failed to give notice and/or timely notice under SEC Rule 17a-11 of
material inadequacy, failed to timely file an annual audit report,
failed to establish, maintain and enforce a supervisory system
reasonably designed to insure its compliance with applicable laws,
regulations and NASD rules regarding electronic
correspondence, research and underwriting activities, and
failed to properly update its supervisory procedures.

The Firm distributed research
reports prepared by an entity affiliated with the firm that were deficient,
and those reports failed to contain the required
research analystsí certifications attesting to the nature of the
views contained in the reports and their compensation.

Redwood Brokerage, LLC : Censured; Fined $15,000

Northland Securities, Inc.
AWC/#E0420050078-01/February 2007

Northland failed to deposit investor funds in an appropriate escrow
account for private offerings and released investor funds before the
minimum contingency was met with bona fide investments. The Firm
rendered false and misleading representations in a private placement
memorandum that investor funds would be released to the issuer only after
the minimum contingency was met.

Northland Securities, Inc. : Censured; Fined $10,000

Bill Singer's
Comment: These escrow cases were a pretty hot issue in 2006. I don't
expect to see the same level of enforcement activity this year, but let's
see.

The Firm engaged in a general municipal securities business through the
execution of unsolicited
liquidating transactions in municipal securities for a public customer on
a riskless principal basis. This activity comprised a
material change in the firmís business for which it had not sought or
obtained NASDís prior approval. The Firm conducted a municipal
securities business without a
qualified municipal securities principal and did not retain all electronic
communications relating to its business. The Firm did not
establish, maintain and enforce a supervisory system and written
supervisory procedures reasonably designed to achieve compliance with the
requirements of the SEC and MSRB rules with respect to the retention of
electronic communications.

McKim Capital, Inc. : Censured; Fined $20,000

Bill Singer's
Comment: Ouch! My guess is that someone just didn't recognize that
the occasional unsolicited liquidating trades required the amendment of
the firm's NASD Membership Agreement. This is a common cause of many
violations -- the "degree" of activity crosses over a
line. However, it doesn't matter. It's still a violation to
engage in an unauthorized business line not expressed in your Membership
Agreement. Also, yet another failure to retain e-communications.

The Firm failed to maintain and
preserve electronic communications relating to its business. The
Firm utilized a vendor to maintain and preserve electronic communications,
and while the vendor initially captured those communications, the vendor
could not later retrieve them and the firm failed to retain those
communications. The Firmís TRACE-eligible securities transactions were
reported late.

Bill Singer's
Comment: Sorry, but this is exactly the type of regulation that drives me
(and many smaller firms) up the wall. Putting aside the TRACE issue,
this is apparently a case in which an NASD member firm hired a vendor to
maintain and preserve its electronic communications. Even according
to the NASD's own statement, that vendor "initially captured"
the communications. However, for reasons that clearly appear to not
be the fault of the member, the vendor experienced some problem that
prevented it from retrieving the previously captured communications.
Now, before you put words into my mouth, let me be quite clear. I
fully appreciate the policy behind requiring firms to preserve their
communications (even if I personally do not fully agree with that policy
as it is written or implemented). Nonetheless, this failure does not
appear to have been the fault of any wilful or even negligent action by
Legend, but seems to have been a breakdown at its vendor. Was it
really necessary to sanction the firm for this failure? Moreover,
did this violation warrant a $30,000 fine (or whatever portion is
attributable ex-TRACE)? Frankly, this smacks of NASD bully-boy
tactics and a firm that found it simply cheaper to pay the fine than fight
the case.

First Montauk Securities Corporation
AWC/#2005001028302/February 2007

The Firm failed to enforce its written supervisory procedures regarding
the review of customer addresses
and customer address change requests by the firmís legal and compliance
departments. The Firm failed to prevent a registered representative
from having a back office clerk
change customer addresses to post office boxes and to his home address in
violation of firm written supervisory procedures.

implement a system that allowed the firm to adequately retain
and retrieve instant messages that registered representatives sent and
received;

apply for the research
analyst designation for a registered representative and for a supervisory
designation for any of the firmís principals to supervise a
registered representativeís activity in his capacity as a research
analyst; and

adopt or implement written supervisory procedures reasonably
designed to ensure compliance with research analyst rules.

The Firm permitted an associated person to act in a capacity requiring
registration as a general securities representative without
being properly registered in that capacity.

Block Orders Execution, LLC : Censured; Fined $11,000

Bill Singer's
Comment: Only the second month of 2007 and we already have a number of
E-communication and registration cases. I'm sure that I've spotted
two of the enforcement targets for this year. Look at the prior Prudential
Equity Group. case and you'll see that NASD is really getting serious
about incoming/outgoing correspondence review --- here with instant
messaging and in Pru's case with faxes. Might be a good idea to
check your policies and procedures.

AllianceBernstein Investments, Inc.
AWC/#SAF2004016001/February 2007

The Firm provided non-cash
compensation to associated persons of other NASD member firms in
connection with the sale and distribution of investment company
securities. The Firm failed to have systems and procedures in place
that were reasonably designed to ensure compliance with NASD
Rule 2830(L)(5) concerning non-cash compensation in connection with
the sale of investment company securities.

Acting through Marshman, the Firm permitted
an associated person of the firm to function as its chief compliance
officer and perform various supervisory functions without being
registered as a principal with NASD. The Firm failed to conduct
independent testing for compliance with its anti-money laundering (AML)
program and to provide for ongoing training for appropriate
personnel.

A branch office of the Firm failed to establish and maintain a system
to supervise its registered representativesí activities reasonably
designed to achieve compliance with applicable securities laws,
regulations and NASD rules. The Firmís supervisory system

failed to detect the activities of a registered representative
engaged in an outside business
activity (Evans did not review
correspondence the representative received and facsimile
correspondence he sent), and

was deficient in that it had inadequate procedures regarding review
of customer account statements to detect irregular activity in
the representativeís customer accounts (failed to follow up on a
ďred flagď that might have uncovered the representativeís Ponzi
scheme).

Acting through Evans, the Firm failed to adequately investigate the
nature of a business entity and to monitor the entityís account that
would have revealed additional ďred flags.ď Evans
failed to conduct any further investigation regarding the
representativeís outside business activities including calling
customers, reviewing statements and verifying financial arrangements, but
instead relied on the representativeís statements.

Bill Singer's
Comment: For once we get a fairly helpful explanation from NASD as to
exactly what should have been done, rather than the typical finger
wagging. I have highlighted in "red" the Principal's
unsatisfactory conduct and would urge all compliance departments to note
the shortcomings. What should be a Compliance 101 fact is that a key
aspect of supervision is to review incoming and outgoing
correspondence. What are you supposed to do about faxes? Many
Compliance Dept. simply forbid the use of any fax other than one located
in their office or immediately nearby. You should maintain a log of
transmissions in and out (which is normally a feature in most fax
machines) and compare the daily handwritten logs to the total of
incoming/outgoing transmissions. Additionally, many firms require
copies of all such transmissions to be provided to a supervisor before
sending and upon receipt. see the subsequent Block
case for an NASD action involving the review of incoming/outgoing instant
messages. Finally, in the event of a red flag involving a registered
rep, firms are now advised that the NASD expects the minimal follow-up of
calls to customers, statement reviews, verification of financial
arrangements. It is pointedly NOT sufficient to simply ask the RR to
explain his or her conduct.

Bloom and Scott affixed public customersí signatures to forms without
the customersí knowledge or consent. The Firm failed to promptly and
accurately file with NASD an amended Rule
3070 Report and failed to amend Scottís Uniform Application for
Securities Industry Registration or Transfer (Form
U4) to disclose a written complaint alleging forgery.

Horace Mann Investors, Inc.:Censured; Fined $10,000

Sherman Marc Bloom: Fined $5,000; Suspended 30 days in all capacities

Jerry Deamus Scott:Fined $5,000; Suspended 60 days in all capacities

Christopher M. Voelker
#2005003255601/January 2007

Voelker forged a clientís
signature on life insurance applications, submitted the
applications to his member firm and paid the premiums for the policies,
and failed to respond to NASD requests for information and
documents.

Vo allowed an unregistered individual (and Vo had no reasonable basis
to believe that the individual was registered with NASD) who was also
subject to disqualification from
association with any NASD member, to be associated with his member
firm. Vo allowed him to

exercise supervisory and
managerial powers at the firm,

control the firmís securities operations and activities, and

engage in and perform a range of activities and functions that were
impermissible and required registration.

Vo made no reasonable effort to prevent the individual from exercising
managerial powers at the firm. Vo willfully failed to amend his Form U4 to
disclose material information.

Varner provided an affiliate of his member firm with a copy of what he
claimed to be a valid insurance
license issued by a state insurance department, when, in fact, his
license with the state had expired, and he had altered
the document to make it appear current before submitting it to his
member firm.

James Lester Varner : Barred

Susan Lynne Rocchio
AWC/#2006004989501/January 2007

Rocchio possessed unauthorized
materials during a Series 7 qualifications examination.

Randall was given discretionary
trading authority over a public customerís account at another member
firm and failed to give the firm and his member firm the required
notifications. Randall engaged in excessive and unsuitable trading in the
customerís account at another member firm.

Bill Singer's
Comment: I wish NASD fleshed this report out. Given the relatively
light fine and suspension, it doesn't appear that Poutre intentionally
erased his emails within seconds of the NASD request. However, these
disciplinary reports shouldn't be detective novels in which the reader is
titillated with clues and left to guess at who done it. What the
hell actually happened here? Was this an accident? What???

Robert Howard Petretta
AWC/#20050003712-01/January 2007

Petretta failed to disclose to his member firm a public customerís
oral complaint and his $400 payment to the customer to compensate
for the surrender charges incurred in connection with cash withdrawals
made against a variable annuity policy. By failing to disclose the
complaint and the $400 payment, Petrettaís member firm was precluded
from conducting a more timely analysis of the customerís written
complaint.

Robert Howard Petretta: Fined $5,000; Suspended 10 business days all
capacities

Bill Singer's
Comment: An interesting and important distinction to keep in mind. While
you may not be required to report to a regulator a mere "oral"
complaint, most firms require you to bring such an occurrence to their
attention. Moreover, you just can't undertake a private settlement
of any complaint -- those payments must disclosed.

Brian L. Pauley
AWC/#2006004940901/January 2007

Pauley withdrew $95,000 from a
deceased public customerís checking and savings accounts,
transferred the funds to newly created bank accounts and moved $65,000
from the new accounts to an investment account in his name, thereby
improperly using the customerís funds.

Brian L. Pauley: Barred

Deane Joseph Pantaleo
AWC/#20050022039-01/January 2007

Pantaleo was found in possession of unauthorized
materials during an examination for Series 7 licensing.

Molenar affixed a copy of a
public customerís signature to a corrected Explanation of
Transaction Form after noticing a
mistake on the original form that the customer signed, and signed
the customerís initials on the second page of the corrected form without
the customerís knowledge or consent.

Bill Singer's
Comment: As I have so often noted about these cases, I understand that the
initial instinct is that the issue is merely a clerical error, BUT you all
have to resist the impulse to add a signature as a means of fixing the
problem. We may all agree on some level that this is somewhat of a
no-harm-no-foul situation. However, the NASD doesn't take that
view. It's their opinion that counts. And, frankly, I
understand the overwhelming public policy in this regard.

David Lester McFadden (Principal)
OS/#2005000226001/January 2007

In connection with the sales of securities, McFadden knowingly or
recklessly made misstatements and omissions of material facts, in that he
falsely represented to public customers that returns that would be
generated by their investments were sufficient to
allow customers to retire from their jobs and replace salary payments with
regular, sustainable monthly withdrawals from their securities accounts.
McFadden recommended securities transactions to customers that were
unsuitable in view of the customersí financial situations and investment
objectives, and he disseminated false and misleading sales literature to
customers, including monthly account statements that contained material
omissions and misrepresentations. McFadden referred
to himself as an experienced ďCPAĒ despite the fact that he did not
have a current, valid, active certificate. McFadden did not submit
the sales literature and correspondence to his member firm for prior
approval. Finally, he effected transactions in the accounts of customers
without their prior authorization, knowledge or consent.

David Lester McFadden : Barred

Bill Singer's
Comment: If you are a beleaguered compliance officer and tired of
explaining to your salesforce why they can't put professional designations
on their business cards or letterhead, show them this case and explain why
you are not going to relax your policy.

Labadie offered and sold unregistered shares of common stocks to public
customers; and he made material misrepresentations or omitted material
facts to customers in those offers and sales. He failed to disclose to
customers any of the risks associated with investment in the stocks and
failed to provide documentation regarding the securities. Further,
Labadie directed customers to pay
for their stock purchases to the firm or another non-registered entity
that Labadie led customers to believe was the firmís clearing firm or
bank. He failed to provide documentation evidencing the purchases, and the
customer funds were never returned to them by Labadie. Finally, Labadie
failed to register as a general securities representative while soliciting
customers to purchase securities.

Bill Singer's
Comment: Okay, now here's one that I absolutely, positively don't
get. You sell unregistered stocks, don't adequately disclose the
risks, direct payment to unregistered entities that you present as your
clearing firm or bank, and don't provide confirmations --- plus you don't
return the funds paid for those shares --- and for all of this you get an
18-month sit-down with a $15,000 fine??? Once again, I ask you ---
is NASD overstating the severity of the facts and compensating for this by
lessening the sanctions, or is there simply too much tolerance for
customer abuse?

Harold Lawrence Klein
AWC/#2006004836001/January 2007

Klein sent a hand-written note to a mutual fund company in which he falsely
represented that he was a public customer. Klein never obtained the
customerís consent or authority to send the letter on her behalf,
designate himself as the representative for the account or change the
customerís mailing address to his own.

Harold Lawrence Klein : Barred

Christopher Lee Jacke
AWC/#2005003161001/January 2007

Jacke distributed sales
literature to members of the public that contained false,
exaggerated, unwarranted or misleading statements and claims; failed to
identify the financial product being promoted as well as its features,
benefits, fees, charges, withdrawal restrictions and risks; failed to
provide investors with a sound basis for evaluating the product; failed to
disclose his member firmís name; and failed to file sales literature
concerning registered investment companies with NASD within 10 days of
first use.

Christopher Lee Jacke: Fined $10,000; Suspended 2 months in all
capacities; Required to requalify as General Securities Representative;
Subject to a "pre-use' filing requirement for all future
advertisements for 2 years.

Bill Singer's
Comment: A somewhat interesting sanction that imposes a 2-year filing
obligation on an individual. Perhaps I'm getting a bit cranky in my
middle age, but, either the NASD has made this all seem far worse than it
is (in which case the relatively light sanctions are a nod by the
regulator that it over-stated the case for public relations purposes); or,
if the facts were as severe as the disciplinary reports suggests, what
else would you need to do in order to earn a long-term suspension or
bar? I'm just not getting the outcome of this one.

Dale Lee Gilliland (Principal)
AWC/#20050031379-01/January 2007

Gilliland reimbursed public
customers for surrender fees based on oral complaints without
notifying his member firm that the surrender fees had been incurred when
moving assets to the firm, or that the customers were verbally
complaining.

Dale Lee Gilliland : Fined $5,000; Suspended 10 business days in all
capacities

Kathy Lynn Gallagher
OS/#2005000863701/January 2007

This Associated Person misused $218,558.00 of public customersí funds
intended to be invested on the customersí behalf, and rather than
depositing the funds into the customersí accounts as instructed,
Gallagher caused the funds to be deposited into a bank account she
controlled without the customersí knowledge, authorization or consent.
She forged, or caused to be
forged, a registered representative and public customersí signatures on
Investment Distribution Forms, causing funds to be wired from the
customersí accounts to accounts under her control without the
customersí knowledge or authorization to conceal her misuse of funds.
Finally, Gallagher falsified books and records, and forged documents and
customersí signatures in order to conceal her misuse.

Kathy Lynn Gallagher : Barred

Bill Singer's
Comment: I generally don't cover these forgery cases because they have
become incredibly common and, to be blunt, there's truly not much
noteworthy about them anymore. Here we have a mere associated person
who manages to convert six-figures of customer monies into her own
accounts. Frankly, what I wish that NASD would do with these cases
is explain how the activity was eventually discovered and what steps could
have been taken (if any) to have prevented the conversion or to have
uncovered it earlier.

The Firm's written supervisory procedures failed to specify
a cycle according to which its non Office of Supervisory Jurisdiction
branches would be inspected. The Firm failed to retain
email messages in an accessible, reviewable format, and to review incoming
and outgoing emails during a period of time. Also, the Firm failed
to develop and implement a written AML
program reasonably designed to achieve and monitor compliance with
the requirements of the Bank Secrecy Act and the regulations promulgated
there under.

Strand, Atkinson, Williams & York, Inc. : Censured; Fined $50,000

Bill Singer's
Comment: NASD seems to be ready to make 2007 the year of regulating the
quality and timing of office inspections. Here there is a violation
for failing to specify the timing of such inspections. Also, looks
like we pick up where we left off in 2006 with an ongoing focus on email
policies.

The Firm facilitated market
timing activities of two hedge fund companies by using multiple
accounts that cleared through different clearing firms in order to
circumvent the trading restrictions the mutual fund companies implemented.
The Firm failed to preserve copies
of electronic communications associated persons in its branch
offices sent or received.

The Firm permitted individuals to act in a capacity that required
registration while their registration
status with NASD was inactive due to their failure to complete the
Regulatory Element of NASDís Continuing Education requirement.
The Firm failed to report statistical and summary information regarding customer
complaints as NASD Rule 3070(c) requires. The Firm prepared an
inaccurate month-end net capital computation and filed an inaccurate
Financial and Operational Combined Uniform Single (FOCUS) report.

an employee to engage in activities that required registration while
his general securities representative registration
status with NASD was inactive
due to his failure to complete the Regulatory Element of NASDís
Continuing Education Requirement, and

its associated persons to engage in activities that require
registration with NASD as Limited
Representatives - Equity Traders (ET) when they were not so
registered.

Also, the Firm failed to ensure that the individual who supervises the
individualsí ET-related activities was registered as an ET, as
required.

Elliot, Shepherd and Griling knew that an individual was an associated
person of another member firm, had a financial interest in an account
opened at Haywood Securities and failed to inform his employer that
he would exercise discretionary
authority over the account. Prior to executing transactions for
this customerís account, acting through Elliott, Shepherd and Girling,
the Firm did not notify the
individualís member firm, in writing or otherwise, of its
intention to open the account, nor did it notify the individual of its
intention to provide notice to his member firm.

John David Shepherd: Fined $15,000 jt/sev with Firm; Suspended 10
business days all capacities

David Brian Elliott: Fined $15,000 jt/sev with Firm; Suspended 10
business days all capacities

Nancylee Girling: Fined $10,000 jt/sev with Firm

Bill Singer's
Comment: This is one of the harshest cases I've seen involving a case in
which as associated person maintained a financial interest in a customer's
account. If I take NASD at its word --- we're not looking at a
situation involving a registered person, but one involving a mere
associated person. None of which excuses the failure to notify and
monitor, but it is significant that the member firm and three individuals
were all sanctioned.

The Firm and Ramson failed to enforce the firmís supervisory system
and written procedures, and Ramson failed to supervise the registered
representatives assigned to the firmís home office.

Acting through Ramson, the Firm failed to

take reasonable measures to ensure that Viola, a designated
principal assigned to supervise a registered representative, was diligently
exercising the supervisory authority delegated to him, and

ensure that the designated principal responsible for maintaining and
enforcing the firmís supervisory system and procedures and for
supervising the representatives at the home office reasonably
exercised the delegated duties assigned to him.

Mekalainas failed to

take reasonable steps to
verify that a branch office was being adequately supervised and that
Viola was diligently exercising his delegated supervisory
responsibilities over the branch, and

reasonably supervise a registered representativeís activities and
permitted him to engage in
securities transactions without proper registration.

Viola failed to

monitor and inspect a registered representativeís off-site
office,

enforce effective procedures to supervise his outside
business activities, and

review his customersí
securities transactions daily and accurately identify his
supervisors in the firmís written supervisory procedures as well as
the specific areas of supervision for which the supervisors were
responsible.

Great Eastern Securities, Inc.: Fined $100,000 jt/sev with Ramson;
Ordered to retain an independent consultant to review the firmís
policies, systems, procedures and training relating to supervisory
deficiencies, and submit a report to NASD with recommendations.

Bill Singer's
Comment: This is a heavy-duty failed supervision case --- note that three
individuals were whacked with hefty suspensions/bars. Note that
inherent within these charges is the NASD's position that supervisors must
do their jobs "diligently" and ensure that principals overseeing
other principals must similarly stay on top of their underling. We
also see warning flares from NASD as to likely heightened regulatory
concerns for 2007: off-site offices; branch reviews, and supervisors
engaged in diligent oversight.

The Firm permitted Kailer to actively engage in the management of its
investment banking or securities business without
being registered as a general securities principal. Acting through
Kailer, the firm

permitted a representative to conduct a securities business while
his registration was inactive due to his failure to timely satisfy the
Regulatory Element of the
Continuing Education requirement;

failed to maintain all required information for new
accounts; and

failed to maintain email
correspondence sent or received by Kailer relating to the firmís
business.

The Firm was unable to produce any written procedures relating to email
or instant messaging prior to contracting for electronic storage.

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